Yesterday it was announced that Auckland is the ninth least affordable city in the world in relation to wages versus house prices. An Aucklander requires 8.3 times their wage to buy a home.
Len Brown criticised the report noting:
Auckland Council had worked closely with central government to put in place the framework and remove “red tape”, making it easier for Aucklanders to build houses.
In 2013 the Government entered an accord with Auckland City to build 39,000 houses by 2016. Not 40,000, but 39000 which suggests it was a figure thought about, not just plucked from thin air.
Anyone who has tried to build a new home understands they must go through the Resource Consent and Building Consent application processes and this takes time.
Of the 39,000 houses due by September 2016, 350 have been completed but only 20 of them are as a result of the accord.
In fact it appears the scheme agreed to have 39,000 consented by 2016 which is not the same as built by any stretch.
This impacts renters as well. Over the last few months rents have been going up an average of $20 a week. Rent in Auckland, is like the petrol component in goods and services, they tend to only go up… until supply outstrips demand, or the worldwide economy collapses again and people are forced to sell their homes to divest themselves of their mortgages. Auckland is a LONG way from the former.
When the Auckland Unitary Plan was announced, it included introducing low rise to the leafy suburbs of Central Auckland… I made a submission in favour. I was in the minority. The outcry from the Epsom’s and Mt Eden’s of Auckland was cacophonous. Not In My Backyard (NIMBY)
On Dominion Road ( a main suburban arterial road into the City Centre) some apartments have started to go up. It is a mixed development of commercial at ground floor and a couple of floors above of apartments. They sit on the edge of the road right by main bus routes. 1 bedroom is over $420,000.
I know someone who bought off the plans and the property has gone up in value by $40,000 in 4 months.
Personal Note
I have been house hunting in Auckland since October. I own a home in Central Auckland in one of the 31 suburbs with an average house price of $1m or more. 31 SUBURBS. This was “just” 13 in December 2012.
I am looking for a home further out of Auckland toward the South (of Auckland). There are so few homes on the market, supply is thin, and this is driving prices higher and higher.
In October 2014 we received an offer for 1.3m on our home. Due to the emergence of a defective title, that sale fell through. Since then Auckland City has valued out house at 1.38m and a repaired leaky home next door to ours which is comparable is now on the market for 1.5 to 1.6m. So apparently our home has risen in value by 120,000 in 3 months.
Around the corner some neighbours bought a 3/4 bedroom bungalow with a pool (fully renovated) for $1.7m five years ago. They broke the price ceiling in our area. They have lived in it. Not done it up, just enjoyed their beautiful home. Just before Christmas they sold it for $2.8m. Broke the ceiling price in this area again.
I have noticed that even in greater Auckland people have an expectation that their homes will achieve in excess of their CV’s (current valuations carried out by Council to set rates) notwithstanding the increased commuter factor.
At the first home buyers end (a misnomer if ever I heard one), my daughter in law has been trying to buy a 2 bedroom unit for 12 months with $500,000. She has failed abysmally. To achieve these prices she has to move to the outskirts which will increase their costs through travel and time. She is being beaten to the punch it seems, judging by the Open Homes and Auctions, by people wanting rental properties.
Anyone who knows Auckland knows it has grown without major planning over the last century and has spread out from the centre like a ripple in a pond. Geographically it is a large city. Houses grew, transport did not. ONE solution, resisted by so many Councils and Governments over the years is decent public transport. GET the people efficiently from the outskirts to their places of work. Create satellite towns so people are self sufficient in their neighbourhoods other than getting to their places of work.
Greed and self interest abound in Auckland’s housing market.
I am fortunate. I am NOT complaining about my situation. I am using my house hunting experience to springboard to how bad the accommodation problem is in Auckland.
The Accord, should it succeed in “consenting” the 38,980 homes by September 2016 is something… but in the meantime house prices go up, non house buyers pay big rental, the rich get incredibly richer and the young and poor cling on by their fingernails. There will be no political will, particularly from the Right, to genuinely address this because a large part of their constituency (and a chunk of Labour’s too) are sitting in these houses rising in value and buying the rental investments. A Government that wants to build more houses BUT turns its back on public transport is not to be taken seriously.
foot note
YES people could leave Auckland to buy a cheaper home. BUT that ignores the reality for so many in Auckland that this is where the job, that keeps them hanging on, is situated. Like Auckland and Aucklanders or not, they make up 1.5 million of our fellow citizens (and Christchurch is heading the same way).
UPDATE
Olwyn has succinctly summarised the issue here
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