Apartment solution stumbling

It’s widely accepted that one of the solutions to Auckland’s housing supply shortage is an increase in apartments – and apartment dwellers.

Traditionally, New Zealanders have preferred living in standalone houses but, due to demographic and cultural changes, the numbers of people opting for apartments is said to be on the rise.

According to a recent survey by the Centre for Sustainable Cities, Auckland is seeing “a gradual evolution of preferences away from standalone houses towards townhouses and apartments”.

However, sales data from property insights service, myvalocity.co.nz, suggests this is not the case.

Valocity CEO Carmen Vicelich said that, unfortunately, their data does not back up the idea that Aucklanders’ housing preferences are evolving towards apartments.

Rather it shows that standalone dwellings have consistently comprised 70% of sales since 2000.

There was an increase in apartment sales in the early 2000’s but that has levelled off and decreased recently, she said.

“I guess what you could probably conclude from this is that people may say they’re more open to buying townhouses and apartments.

“But it’s not actually translating into sales if you look at the figures. “

And, despite the cranes currently scattered across Auckland’s skyline, it seems that the amount of apartments coming onto the market has dropped in recent years.

New homes.co.nz data shows that the proportion of new build standalone houses in the new build total decreased from the 1980's through to the 2000s.

Those new build standalone houses were largely replaced with new build apartments.

But the trend reversed in the 2010s and, in recent years, new build apartments have made up just 13% of the new build total.

Homes.co.nz’s head of marketing Jeremy O'Hanlon said aggressive growth in apartment housing stock in the 2000s which led to an oversupply could be the reason for this.

There has been recent intense focus on apartment growth to raise supply for Auckland, he said.

“Development projects have a long timeframe, so there are a lot expected to land in the second half of this decade.

“But build rates across all classes suggest that we're struggling to keep up with the development rates of prior years."

Adding to the woes of Auckland apartment advocates are a number of recent high profile apartment development failures and a tightening up of banks’ lending to developers.

NZ Property Investors Federation executive officer Andrew King said the tightening up of lending criteria has made it harder to get finance to build new dwellings and apartment developments.

“It’s exactly what you don’t want when trying to deal with a supply shortage.”