Creating more varied and affordable housing stock in Auckland

22 Oct 2021

By Tamba Carleton

Varied and affordable housing stock in Auckland CBRE New Zealand 972x1296
New build homes are adding desperately needed supply to our housing market. They are also lifting the average quality of our ageing housing stock by using modern construction materials and techniques that make homes warm and dry all year round. The more people buy into new homes, the more new development can proceed, which ultimately makes our housing stock more varied and more affordable.

The Unitary Plan has been a gamechanger in allowing more housing development across Auckland, as well as more variety. Apartments and terraced houses are popping up across the entire region, offering a range of price points. Let’s take a closer look at the types of new housing that are common in today’s development sector.

Houses

Standalone houses one or two storeys high make up the bulk of existing housing stock in Auckland, but demographic and societal change mean that this typology is probably going to oversupplied in the future. This is one of the reasons that the year to June 2021 saw a record low 36% of dwelling consents being for houses.

Back in the day when each household had a mum, a dad, 2.4 kids and a suburban dream, standalone housing was ideal. In today’s world people are living longer, having fewer children and have a different lifestyle to that of their parents.

There is not a lot of development ready land in the existing urban area for standalone dwellings, with most occurring on the outskirts of the urban area where lower land values and lack of public transport make this typology best suited. The locations of new build houses in Auckland tends to mean a big commute which can be unappealing. 

Terraced Housing

Terraces are horizontally attached dwellings, sometimes referred to as ‘row houses’. The end terraces tend to be the more expensive of the group as they have larger yards and windows on three sides. The middle terraces tend to be the cheaper options as they share walls with neighbours on each side.

Terraces have wide appeal generally. They are slightly denser than houses but not as dense as apartments. This makes them suitable for areas zoned Mixed Housing Suburban and Mixed Housing Urban, which happens to be most of Auckland.

Their wide appeal means they are doing the heavy lifting in adding new supply, accounting for 45% of dwelling consents in the year to June 2021. Terraces suit busy couples and young families who like to live in urban locations but don’t want to deal with endless yard maintenance or cannot afford houses in the area they want to be.

Apartments

Apartments are a niche type of housing in the Auckland market, with 38,400 units accounting for just 7% of housing stock. Regardless, they have been a significant component of growth having grown from 24,500 units just 10 years ago.


Most of the stock back then was CBD and/or investor-focused. Unsurprisingly, this wasn’t an attractive living option for most people, and as a result apartments got a bit of a bad rap. With the Unitary Plan enabling the denser apartment typology in town centres and around transit nodes, developers started to produce high-quality apartments for owner-occupiers, ranging from affordable, to mid-market, to luxury.

The benefits of an apartment lifestyle are increasingly being recognised. Efficient use of land means they tend to be the most affordable of the three typologies, single level living suits people with restricted mobility, and there are safety and security aspects that allow a lock up and leave lifestyle.

The major challenge for all types of new build housing is balancing the quality and size of the dwelling with its retail price in a location specific context. Although we would love them to, developers are simply unable to provide large, luxurious dwellings at cheap prices because aside from being a poor business strategy, they won’t get bank finance for a new development unless they can show that it will return a profit.

The large number of inputs in new housing development in New Zealand all combine to result in high development cost. Market prices for land, labour and construction materials are only some of inputs; you can’t forget the costs associated with development management, sales and marketing, consenting, regulatory and compliance, legal, utilities connections, financing, contingencies and more. Many cost inputs mean many potential risks for a developer, but also significant reward potential if they do manage to get everything right.

Developers of new housing in Auckland are well attuned to the market and are providing people with dwellings they want, at prices they can afford. The recent emergence of terraced and apartment housing enabled by the Unitary Plan has had a real impact in bringing our housing stock into the 21st century to suit current and future housing need.

Going forward, communities will feature a much broader variety of housing than what we have seen in the past. This is a good thing as diversity of housing typologies contributes to healthy communities by giving people options to live in the areas they want to and at price points they can afford.