The Unitary Plan. The Housing Affordability Measure. The Bubble. There are a lot of terms and statistics surrounding the local real estate market – so many that it can be difficult to take stock of where we are at.
Let's try and break that down – particularly around how many properties our city needs, and how close we are to achieving that. After all, more property helps supply meet demand, which keeps your North Shore property's price growing at a sustainable pace.
Real estate, just like anything else, is driven by two primary factors: supply and demand. With migration levels high, interest rates low and plenty of equity in existing real estate, demand for buying property on the North Shore and beyond has been incredibly strong over the last few years.
Supply, however, has been slow to meet it – that's part of why prices have risen so much. According to Statistics New Zealand, in March this year across New Zealand we saw consents for 2,779 new pieces of residential property. The vast majority of that is houses, with townhouses, apartments and retirement units also included.
In the year leading up to March, there were just over 30,000 consents issued for new properties across the country – an increase of 10 per cent on the year before. All up, the value of this new construction sits at around $1.2 billion. So there's plenty going on – but is it enough to satisfy a growing demand?
While those numbers seem promising, CoreLogic's research has shown that Auckland's real estate construction is still falling short. In an April 27 report, they indicated that Auckland needs somewhere between 10,000 and 12,000 properties per year. Statistics NZ data shows that we broke the 10,000 mark in the year to March for the first time since 2005.
So we're getting there, but consistent construction levels are still an aspiration – CoreLogic's research suggests we need to hit that 10,000 point every year for the next 20 years at least.
While that's just one year where Auckland's supply got close to meeting demand, things are looking good for the near future. BIS Shrapnel's January report on our construction market said we were in the midst of a boom period, with a strong jobs market ready to underpin even more building in the next few years.
On top of this, CoreLogic reported that Auckland in particular is intensifying its residential construction in a way that's going to make things easier. In plain English – we're building more apartments. By taking up less space and coming in larger blocks, unit construction gives us many, many more homes without taking as much space or time per dwelling as standalone house construction can.
In fact, they note that in the last four years, houses have gone from being 80 per cent of new homes built to just over 50 per cent, while apartments and units now account for as much as 40 per cent of new building. "The new data highlights that at a very minimum, intensification has started: even if it does need to pick up the pace," CoreLogic's report concluded.
As for how that impacts property in Takapuna and across the Shore? Well, bigger construction levels should mediate demand (if they can keep going), which would ideally quell any talk of there being a housing bubble. The Unitary Plan has also allowed for a lot more construction to take place, so we could be on the way to healthy, balanced market. It's just going to take quite a bit of time.
If you're part of that strong demand and want to find property sooner rather than later, make sure to talk to the team at Ray White Takapuna.