Property demands booming

By ANNE GIBSON

"All fired up" is how the Auckland Regional Council describes the city's residential building and property economies.

Migration is one of the factors pushing the Auckland region's demand for more housing and land, according to the study, Auckland Region: Business and Economy 2002, released this week. A separate report, Auckland City: Hub of the Auckland regional economy, also came out.

The reports predict the rise of more apartments, terrace and town houses as "an important growth sector within the real estate market, not just in the CBD but also in city fringe areas and suburban centres."

In the past year, resource consent applications to build new apartments exceeded the number of applications for standalone new houses - a trend which the ARC does not see turning around and notes that new apartment buildings accounted for an overwhelming share of growth in Auckland's housing market.

The ARC's intensification strategy is based on its desire to encourage councils to steer growth towards building up around selected town centres and along transport corridors with a range of housing types, including low and high-rise apartments, town houses, terraces, semi-detached, cluster housing and other multi-unit forms. Combined with this is the ARC's stated policy in its regional growth forum for greenfield developments in specific limited areas.

The ARC has predicted that by 2050, more than 500,000 Aucklanders will be living in higher density, multi-unit accommodation, compared with around 125,000 people doing so in 1996. But the reports say how buoyant Auckland's residential property market is generally, citing:

* House sales over the three months ended December are running 43 per cent ahead of the same period in 2000.

* House prices are rising, although still not as fast as average prices throughout the country.

* The rate of house construction in Auckland is well ahead of the rest of the country.

Auckland's property market is now among the most buoyant in New Zealand, the reports say, fuelled largely by strong population growth from inward migration flows which include the return of wealthy ex-pats. Aucklanders are living in more intensive housing developments.

"Apartments are becoming increasingly popular in the Auckland region and have been a source of growth in recent months. The proportion of new dwelling consents issued for apartments in the region has risen from 5 per cent in the mid-1990s to roughly 20 per cent," the reports say. The reports cite further positive influences on real estate activity in Auckland:Relatively low mortgage interest rates, although they refer to predictions that these will tend to rise the middle of this year.

Households enjoying real income growth as wages rise and the rate of inflation slows.

Falling unemployment over the past year, marginally increasing the number of people able to buy or build their first home.

Rising house prices helping restore household wealth and stimulating house construction.

But the reports also pointed to some less rosy aspects of the property market, saying non-residential construction market was not as good. The value of consents for offices, factories, retail malls and other commercial property during the past year was well down - 25 per cent less - on a year earlier.

This pointed to some decline in overall construction activity within the city over the coming year compared with recent years: "The first stage of the Britomart transport project will be the main commercial building project in the city over the next year."

The reports emphasise the importance of Auckland City. Although the region's population is reasonably well spread through the major parts of the region, half of the region's economic activity is concentrated in Auckland City, which is the geographic centre of the region, has the major port and therefore is a focal point for the region's transport services. It also has the lion's share of two of the region's biggest sectors - business and financial services.

Auckland Regional Council

(Copies of the reports are available from ARC Enviroline on 09-366-2070, or 0800-80 60 40).