Is Auckland’s building boom cooling off? 1500 fewer homes built in past year


As house values record their biggest fall in 14 years and real estate agents see sales decrease, experts explain how the power is returning to buyers. Video / NZ Herald

Auckland’s building boom appears to have cooled with 1500 fewer homes built in the past year and dropping demand from buyers.

Auckland Council issued 12,874 Code Compliance Certificates for finished newbuilds in the 12 months to July this year, down 1507 or 10 per cent compared to a year earlier, the latest figures showed.

CCCs are given out once a new build house or apartment is finished and passed its inspections.

Blair Chappell – co-owner of Williams Corporation one of the nation’s biggest home builders – said the city’s building sector had been red hot in 2022 before easing off this year.

“Definitely the industry reached a peak at the end of last year.

“The market was really hot, really busy and now has quietened back.”

Yet despite slowing, Auckland’s construction industry is still running at historically busy levels.

"Buyers now have more time to assess the market offerings and decide what they want to purchase," home builder Blair Chappell says. Photo / 123rf
“Buyers now have more time to assess the market offerings and decide what they want to purchase,” home builder Blair Chappell says. Photo / 123rf

House building had been increasing in the city since Auckland Council introduced its major new planning document, the Unitary Plan, in 2016, which made it easier for developers to build townhouses and apartments.

That led to 9147 new homes being issued with CCCs upon completion in the 12 months to July 2019.

By the 12 months to July 2021 that number jumped to 14,381 homes being completed as developers rushed to cash in on skyrocketing prices during the Covid pandemic by building more townhouses and apartments.

However, the sale of newbuild homes and townhouses has slowed in the past six months after the market turned and house prices began falling sharply.

Auckland’s average property value fell to $1.45m in the three months to the end of August – or $66,000 less than in May, data by analysts Valocity showed.

Sales volumes also dropped. James Wilson, head of valuations at Valocity, said fewer homes were sold in Auckland over the past three months than during same period in 2017 when the city’s housing market was mired in a slump.

Chappell said the slowdown meant those buyers able to buy were typically taking more time to choose.

“Buyers now have more time to assess the market offerings and decide what they want to purchase.

“As opposed to going into it slightly more blindly and having to rush, which is what happens in a hot market.”

To be successful in that market, Williams Corporation aimed to deliver homes buyers wanted to live in and to get their projects built and sold as quickly as possible.

That way they didn’t pay too much for the land, Chappell said.

“You have to have the right priced stock in the right areas.

“And if anything we’ve started to see our sales activity pick back up.”

He also said the quieter market was easier for his team to create new developments in.

That was because a lot of the smaller, less experienced developers who jumped in during the hot market to try to cash in on sky-high prices were now dropping out as it became harder for them to turn a profit.

'There has been an indication for some time that the severe skill shortage is really starting to impact the conversion of building consents into real houses.': Chris Darby. Photo / 123f
‘There has been an indication for some time that the severe skill shortage is really starting to impact the conversion of building consents into real houses.’: Chris Darby. Photo / 123f

That in turn meant there was less competition to buy land, secure tradies and building materials and get council planning consents, he said.

Auckland councillor and planning committee chairman Chris Darby said the shortage of skilled workers also appeared to slowing down the delivery of newbuilds.

“There has been an indication for some time that the severe skill shortage is really starting to impact the conversion of building consents into real houses.

“So plumbers are poaching plumbers, sparkys are losing their electricians … it is right across the board.”

New Zealand Institute of Building Surveyors vice-president Darryl August said his industry had been flat out over the past two years inspecting buildings to maintain quality standards.

At his own business, August said he’s been working 80 hours a week to try to keep up.

But after two years of closed borders, his company was still facing months’ long delays to gain approval for a visa for a skilled worker from the United Kingdom.

“We need the workers now, not in six months’ time,” he said.

August said council teams across the country had been run off their feet trying to keep up with building planning applications.

That had led to his members discovering increasing numbers of homes that had been granted council approval only to later be found to be defective, he said.

Auckland's house building boom peaked at the end of last year, leading house builder says. Photo / 123rf
Auckland’s house building boom peaked at the end of last year, leading house builder says. Photo / 123rf

“So things are slipping through the cracks.”

Darby said although there were valid criticisms about Auckland Council’s consenting process, it had been greatly improved in recent years.

Among the improvements was working with “preferential” developers – who year-in and year-out built large numbers of new townhouses and apartments in the city – to grant them faster approvals.

Chappell agreed there had been recent improvements.

“In all fairness, when the market was at its peak, Auckland Council consenting was an absolute nightmare,” he said.

“But with our most recent jobs that we’ve got through Auckland Council, they have actually been pleasingly and significantly faster.”

Chappell also said it was too early to point to a drop off in CCCs as evidence Auckland’s building boom was ending.

That’s because the completion certificates can sometimes be issued years after a project is started.

That could occur for many reasons, including construction delays, the choice of developers to sit on empty land or delays in planning approvals.

It also meant some of the recent CCCs could be approvals for projects started two years ago and therefore may not be reflective of the current market downturn, Chappell said.

“So we probably need to look at longer-term data to see if this will stay that way or is just a short term blip.”



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