Auckland Population Growth and Dwindling Land Supply

By | November 19, 2010

Auckland will face pressures on land development capacity, significant increases in the number of house renters and rental properties required, as well as pressures on transport infrastructure due to strong population growth over the next 16 years, the Centre for Housing Research said in a report released today.

Here is the release from the Centre for Housing Research.

The Centre for Housing Research, Aotearoa New Zealand (CHRANZ) has today released the research report “Auckland Region Housing Market Assessment” (November 2010) that assesses current and future housing demand and need (2006 to 2026) in the Auckland region, its distribution, composition and also its implications. This is the first such assessment using the New Zealand housing market assessment manual.

Undertaken by Darroch Limited, this research was funded by CHRANZ and the Auckland Regional Council.

Key findings:

• Strong population growth in Auckland will place stress on Auckland’s dwelling capacity, infrastructure, transport, and city form as it shapes the housing market until 2026.

• Dwelling demand for the 14 defined housing market areas (HMAs) will increase by 39.6 percent – from 431,890 dwellings in 2006 to 601,420 by 2026.

• The Auckland region already has (June 2009) significant renter housing affordability issues – 49.9 percent of all private renter households are experiencing ‘financial housing stress’ – households spending more than 30 percent of that household’s total gross income on housing costs.

• Demand for rental accommodation will continue to increase a significantly faster rate (63.5%) than demand for owner-occupier dwellings (26.2%).

• Home ownership has significantly reduced from 70.7 percent to 66.9 percent between 1996 and 2006.

• The absolute size of the ‘intermediate housing market’ (IHM) increased from 39,700 to 77,110 households between 2001 and 2009. ( IHM is the number of private renter households who have a least one member in paid employment and cannot afford to purchase a dwelling at the lower quartile sale price, assuming standard bank lending conditions.)

• Housing demand will be particularly shaped by the growth in older, couple-only and single person households and will increase demand for smaller one and two-bedroom dwellings.

• Auckland’s residential development capacity under the existing Regional Growth Strategy (RGS) will be nearing full capacity by 2026.

• A mismatch between the location of dwelling capacity in the region and the location of projected employment growth (especially for higher skilled and high paid occupations in Auckland city). 51 percent of the employment growth in the region is projected to be located in Auckland City but this area only has 32 percent of regional dwelling capacity.

• The implications for Auckland and its new governance will include: pressures on land development capacity; significant increases in the number of renters and rental properties required; as well as pressures on transport infrastructure.