August Property Report: too many flyers, not enough houses

Coming home from the office last Thursday, I opened my letterbox to find this:

five flyers

That’s – count them – five real estate flyers arriving in my letterbox in just one day, from agents asking if I’d like them to sell my house. To which the answer is sure, as long as my landlord doesn’t find out.

All this fighting for my love is a telling indication of how heated property is here in Auckland. Exhibit B: my neighbour’s house was listed two weeks ago with an auction to be held in three weeks. It sold in just one.

So there’s some anecdotal evidence. I suppose you want some actual data too, right? Very well:

 

Some actual data

August set a few more records, according to our friends at realestate.co.nz.

Auckland and Coromandel reached new asking price. Auckland, despite more listings, hit an all time low of just 11 weeks worth of inventory. Waikato and Bay of Plenty also have fewer houses available than ever.

If we compare the headline figures to last year, the national mean asking price is up 9% on August 2012, listings are up 3.4% and inventory is down 14%. In short, there ain’t enough houses coming on the market to keep choice, or price, at an acceptable level for buyers. Check out the full report here.

Meanwhile, QV just released their latest stats showing property prices have increased 8.5% in the last year. This is, again, largely driven by Auckland and Canterbury; most regions, while up on last year, are far behind. They expect house prices to increase “for some time yet.”

 

Some alternative views on Auckland

Some schools of thought argue that Auckland’s price growth is not as terrible as it seems.

Figures released last month by Barfoot & Thompson suggest the Auckland market has seen “solid, rather than spectacular gains.” A look at three bedroom properties by area, over the past decade, show price rises ranging from 58% (Franklin/rural Manukau) to 100% (West Auckland). Most of the increases came during the 2003-07 boom period.

QV, curiously, reckons the jump happened the other way round:

…over the past decade Auckland has increased 87 per cent compared to 88 per cent for all New Zealand. In fact, many other parts of the country increased in value much quicker than Auckland during the boom years of 2003-2007. After this time the rate of increase skyrocketed in Auckland compared to the most of the country, bar Christchurch.

They provide some other interesting stats also:

  • Auckland has nearly 418,000 houses, flats and apartments – 31.1% of the nationwide total.
  • With a 2012 population of 1.5 million, this equates to nearly 3.6 people per property.
  • From 2007-12 Auckland’s population grew by 111,500. There were only 25,850 building consents over that period. If we were to divide one by the other, that gives us 4.3 new Aucklanders per new property. Clearly, supply is an issue. Auckland needs to up its building consents game.

 

Some houses, but is it enough?

That was the topic of a recent article by Alistair Helm over at Properazzi. As he says, for the first time since November 2008 the number of consents in a 12 month period has exceeded 19,000.

Is this good? Well, the 1970s saw annual consent figures of over 35,000. Numbers at the turn of this century exceeded 30,000. So clearly we still have more catching up to do.

Interestingly, the nationwide average number of people per household is 2.67, slightly higher than before the Global Financial Crisis (where young people opted to bug their parents a wee while longer) but still lower than in Auckland alone.

It wasn’t just young folk who were slow to get moving during the GFC; construction plummeted during this period as Alistair’s chart shows:

Image

The estimated shortfall over this period, according to Alistair, is 38,000 properties. Ouch.

The Auckland Council reckon they’re onto it though. The Housing Accord was approved yesterday, the legislation around it has already passed, and now they have a timetable drawn up for their first “special housing areas” – those parts where consents will be fast-tracked.

All going well, we’ll see SHAs containing at least 5000 new homes approved by Christmas. The end goal is 39,000 homes in three years. Can it be done? As interest.co.nz says, it’ll be tough:

The moot point that will remain is who will undertake all the developments and can the 39,000 in three years target be achieved.

Auckland did achieve 12,000 new houses in a year briefly in the early 2000s, but the figure’s averaged closer to 4000 a year in recent years and the long running (20-year) average is only 7400 a year.

The other potential snag in ramping up development in Auckland is that the rebuilding of Christchurch means there will be huge competition for labour and resources.

 

Some of your thoughts

Are prices too high where you are? Are we too worried about Auckland? Got any stories you’d like to share? Ready to put up the “No Junk Mail” sign? Tell us all about it in the comments or over on Facebook.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s