A helpful reader, 'energy24.7', left this comment:
And energy24.7 is absolutely right. I'd steered away from the seasonally unadjusted numbers so as to get a better feel for the underlying trend, which is fine in many circumstances, but the baby that went out with the bathwater was the information in the raw data. So here it is*.Check the raw numbers for consents. You'll pretty quickly see the downturn in trend is due to reduction in the volatile apartment series. Houses are still on their way up (excepting a little seasonal variation). But I'm not saying they're anywhere near where they need to be, just it explains the downturn in dwelling trend
And as energy24.7 said, the fall is indeed down to apartment numbers dropping to virtually nothing, while house numbers have been gradually increasing.
Which all brings us to a new question, though: what's going on in the apartment sector? There are umpteen possibilities (and I'm hoping more housing-expert readers will chip in with their views). It could, for example, be happenstance: it's a fairly volatile series. But I'm not convinced: you'd expect apartment consents to be well above the minimal, credit-constrained levels of the GFC. Or it might be capacity constraints, though again that doesn't feel especially plausible.
Or are developers waiting for a potentially more intense-development-friendly environment under the new Auckland Unitary Plan? If so, we're in for at least a few more months of very low apartment consent levels, as the recommendations from the Plan hearings panel won't go public till July 27, and even then we don't know whether the Council will buy into them (they've got to notify their decision by August 19). And then there will be lags while developers go through the hoops of whatever planning process emerges from the whole debate.
Whatever it is, it needs to be fixed, pronto. Falling levels of apartment consents are the very last thing the Auckland housing market needs.
*An earlier version of this graph had the lines mislabelled (houses and apartments were the wrong way round). It's right now. Thanks to alert reader Mark who picked it up.
Apartments may have been light, but the townhouses/other units category has grown strongly. Would they not be subject to Unitary Plan uncertainties too?
ReplyDeleteIt's a fair question. I dunno. Apartment block heights seem to be a particularly sticky planning/NIMBY issue so I can see more uncertainty around that than I can about even very tightly packed terraces (which as the photos in the original post showed, are now a more accepted part of the landscape). Another possibility is that developers may now be finding it more profitable to do terraces than apartments: many of the sales in that development I photographed are to Asian families with young kids, and perhaps developers are just meeting the pattern of demand? Whatever's going on, though - and I'm genuinely puzzled - the net effect is that ongoing terraces/townhouses aren't making up for fewer apartments, so we're either closing the housing deficit more slowly or even letting it increase
DeleteThe graph appears to be mislabelled. The very spiky green line that has dropped in the last few months is labelled "Actual New Houses" and the smoother purple line that is trending slightly upwards is "Actual New Apartments". Shoudln't they be the other way around?
ReplyDeleteAnother comment is that the green line is very spiky month-to-month, so a short-term drop may not have much longer-term importance.
Thanks for picking up that mislabelling error (I wish someone else had spotted it even earlier!). Fixed now. I'll credit it to you in a mo.
ReplyDeleteAnd I agree, the spikiness may be just that. If it spikes up again (and ideally stays up), no problem or at least less of a problem. We'll see