Auckland’s not-so-super living arrangements

Source: CATHERINE HARRIS – The Dominion Post

 Auckland will need to build 5000 state and private rental houses every year for the next 15 years to accommodate population growth, two housing reports say.

The reports, commissioned by the Centre for Housing Research Aotearoa New Zealand, coincide with fresh Statistics New Zealand figures which show the country’s population is growing naturally by just under 35,000 a year.

Falling home ownership and high house prices are forcing increasing numbers of people to rent and the reports estimate that by 2026, Auckland will need 75,000 rentals. The reports looked only at Auckland, the country’s largest and fastest-growing city.

One of the reports’ authors, Ian Mitchell of Darroch, said it was unclear where the incentives would come from to ensure $1.6 billion a year was pumped into the rental market.

“With the changed housing market landscape that we are seeing at the moment – house prices not going up by as much, and changes in the tax regulations around tax depreciation and LAQC companies – it’s not perhaps as an attractive environment for investors as it has been in the past.

“If we don’t see the growth in the rental stock coming through, we’re likely to see a number of undesirable consequences happening with increased crowding occurring. And as the pressure builds in the market, that’s likely to put a lot more upward pressure on rents, which will mean that those renter households will be paying an even greater percentage of their income in rent, and make it harder and harder to save any money or pay off any debt they may have.”

The reports predicted that by 2026, demand for housing in Auckland would have leapt by nearly 40 per cent to more than 601,000. By that time Auckland would be getting close to running out of residential land. Mr Mitchell said there was room for another 150,000 dwellings in Auckland. The reports forecast demand for 130,000 houses over the next 15 years.

“So under the existing planning regime, Auckland would be getting near the end of their available development sites.”

Auckland’s planners would need a mix of solutions, which might include urban renewal, intensification, landbanking, rezoning and private-public partnerships with developers. “The Auckland council now has a window of opportunity of five to 10 years to sort this out before the situation gets too critical, and they’re fully aware of this.”

Auckland also faced a big rise in commuter numbers because of a mismatch between areas of housing and jobs growth, he said.

Job numbers were growing along the north-south motorway, the CBD and Panmure, while new housing was most likely on the urban fringes.

Future housing demand would be shaped by the rising number of elderly, singles or couples without children. Elderly renters were “going to be the biggest growth part of the private rental market in Auckland”, Mr Mitchell said.

Ironically, although Auckland has a strong population growth forecast, it runs the danger of losing locals because of housing affordability.

Census figures between 1996 and 2006 show that more New Zealand residents migrated out of Auckland than moved in. “If housing affordability remains poor in Auckland and worse than other locations, it could have an impact on its ability to grow,” Mr Mitchell said.

Super-City Facts

Nearly half of those privately renting households in Auckland are financially stressed – that is, they spend more than 30 per cent of their total gross income on housing. Demand for rental accommodation is rising faster (63.5 per cent) than demand for owner-occupied houses (26.2 per cent). Housing need is expected to be heaviest in Auckland’s south-east, south-west and Manukau north-west. Young households (20 to 40 year olds) rated family, friends, schools and lifestyle more important than proximity to work when choosing where to live, but access to transport was essential.