1. ISSUE 1.1. This Report Has Been Produced to Meet the Quarterly

OA # 13642791 TO Councillors FROM Peter Crawford

DATE 23 October 2019 SUBJECT URBAN DEVELOPMENT CAPACITY INDICATORS FOR PALMERSTON NORTH - MARCH 2019 QUARTER REPORT

1. ISSUE

1.1. This report has been produced to meet the quarterly reporting requirements of the 2016 National Policy Statement on Urban Development Capacity.

2. URBAN DEVELOPMENT CAPACITY INDICATORS REPORT – JUNE 2019 QUARTER

2.1 There was a decline in the number of new residential dwellings in Palmerston North in the June 2019 quarter compared with the same quarter last year. Consents for 101 new dwellings were issued in the quarter compared with 116 in the June 2018 quarter. In the June 2018 quarter 22 retirement village housing units were approved.

2.2 There was also a decline in the value of non-residential consents issued compared with the year ended June 2018. Major projects approved in the previous year were the Food HQ building, BUPA retirement village, AgResearch development projects and the addition to and strengthening of the Toyota distribution centre.

2.3 The Infometrics indicator for housing affordability shows a deterioration during the past 12 months, with house prices increasing faster than incomes. Average house prices in the city were 7.6 times average incomes in the year to June 2019, reaching the previous peak of 7.6 times in 2007.

2.4 Rental affordability in Palmerston North deteriorated slightly between June 2018 and June 2019. Average rents increased from 28.0 percent of average annual salaries and wages in June 2018 to 28.3 percent in June 2019. The affordability score for New Zealand was 35.3 percent in June 2019.

Peter Crawford ECONOMIC POLICY ADVISOR

Annual Population Report 2019

Overview

Significant revisions have been made by Statistics New Zealand to the June 2018 population estimates it published last year. The total New Zealand population is now smaller than previously estimated in 2018, but the population of the Manawatū-Whanganui region is now larger than previously estimated.

The population of the Manawatū region is estimated to have reached 120,000 people as at 30 June 2019, increasing by 1,600 people (1.4% increase) in the past 12 months. Estimated population growth for New Zealand was 1.6%.

Palmerston North’s population is estimated to have increased by 1,000 people in the last 12 months, an increase of 1.2%, reaching 88,300 as at 30 June 2019.

Manawatū District’s population is estimated to have increased to 31,700 as at June 2019, increasing by 700 people, 2.2% increase, in the last year.

The Manawatū-Whanganui region population is estimated to have reached 249,700 people, increasing by 3,500 people in the year to June 2019, an increase of 1.4%. This is the largest annual increase in the annual population estimates series, which began in 1991.

Annual population estimates

Annual provisional population estimates were released by Statistics New Zealand on 22 October, which show the population of the Manawatū region reached 120,000 in June 2019. The Statistics New Zealand estimates suggest the region’s population increased by 1,600 people from June 2018, an increase of 1.4%. The strongest rate of population growth in the region was in the 65 years and over age group, which increased by 3.3% between 2018 and 2019. The weakest growth was in the 40 – 64 years age group, which increased by 0.3% in the last year.

Estimated population by age group

Age group 30 June 2018 30 June 2019 Annual change

Palmerston North city

0-14 Years 17,200 17,300 0.6% 15-39 Years 32,900 33,400 1.5% 40-64 Years 24,700 24,800 0.4% 65 Years and over 12,500 12,800 2.4% Total 87,300 88,300 1.2% New Zealand 0-14 Years 948,600 957,500 0.9% 15-39 Years 1,632,300 1,661,700 1.8% 40-64 Years 1,516,400 1,529,100 0.8% 65 Years and over 743,700 768,800 3.4% Total 4,841,000 4,917,000 1.6% Source: Statistics New Zealand

The median age of the City’s population is estimated to have remained at 33.9 years in June 2019, while the median age for Manawatū district increased from 41.2 to 41.3 years between 2018 and 2019. The median age for the New Zealand population is estimated to have increased from 37.3 years in 2018 to 37.4 years in 2019. New Zealand’s median age peaked at 37.6 years in 2013 but declined between 2013 and 2018. A decline in the number of people migrating overseas and an increase in the number of people arriving from overseas contributed to the decline in the median age.

Manawatū-Whanganui region

The Manawatū-Whanganui region population is estimated to have increased by 3,500 people between June 2018 and June 2019, an annual increase of 1.4%.

Natural population growth in the Manawatū-Whanganui region (the difference between births and deaths) was 900 people while migration contributed an additional 2,600 people. The region had the eighth fastest growth rate out of the sixteen regions. Regions which experienced a weaker rate of population growth than the Manawatū-Whanganui region in the year to June 2019 were Hawke's Bay, Taranaki, Wellington, Nelson, Gisborne, Marlborough, Southland and West Coast.

Estimated population as at 30 June 2018 to 2019 change

2018 2019 Number1 % change Manawatū district 31,100 31,700 700 2.2% Horowhenua district 34,300 35,000 700 2.1% Rangitīkei district 15,500 15,750 250 1.7% Whanganui district 46,700 47,300 600 1.2% Palmerston North city 87,300 88,300 1,000 1.2% Tararua district 18,500 18,650 150 0.9% Ruapehu district 12,650 12,750 100 0.6% Manawatū region 118,400 120,000 1,600 1.4% Horizons North-West 74,850 75,800 950 1.3% Horizons South-East 171,200 173,650 2,450 1.4% Total Manawatū-Whanganui 246,200 249,700 3,500 1.4% region New Zealand 4,841,000 4,917,000 76,000 1.6% 1Note: rounding of the population estimates means the reported increase in the number of people on an annual basis is different from the difference between the June 2018 and June 2019 totals. Source: Statistics New Zealand

Manawatū district and Horowhenua district had the the fastest rates of population growth in the Manawatū-Whanganui region, with annual growth rates of 2.2% and 2.1% respectively between 2018 and 2019.

Comparison with other Cities

Auckland is estimated to have accounted for 22% of total population growth over the last year, but its growth rate of 1.5% was slightly below the 1.6% growth rate for New Zealand.

Palmerston North has a 1.8% share of the national population and is the 9th largest territorial authority – the largest territorial authorities ranked by size are Auckland, Christchurch, Wellington, Hamilton, Tauranga, Dunedin, Lower Hutt and Whangarei.

Estimated population as at 30 June 2018 to 2019 change Major urban area 2018 2019 Number % change Tauranga city 140,800 144,700 3,900 2.7% Whangarei district 93,700 96,000 2,300 2.5% Hamilton city 165,900 169,500 3,600 2.2% New Plymouth district 83,100 84,400 1,300 1.6% Auckland 1,618,400 1,642,800 24,400 1.5% Rotorua district 74,000 75,100 1,000 1.4% Napier city 64,100 65,000 900 1.4% Christchurch city 380,200 385,500 5,300 1.4% Hastings district 84,000 85,000 1,000 1.2% Palmerston North city 87,300 88,300 1,000 1.2% Lower Hutt city 107,600 108,700 1,100 1.0% Dunedin city 130,500 131,700 1,300 1.0% Wellington city 209,000 210,400 1,400 0.7% New Zealand 4,841,000 4,917,000 76,000 1.6% Source: Statistics New Zealand

Revisions to June 2018 population estimates

Major urban area revisions

Statistics New Zealand has made substantial revisions to the population estimates previously published for June 2018. The revisions are based on a change in approach taken by Statistics New Zealand for measuring long-term overseas migration flows. The estimated population of New Zealand has been revised down by 44,500 people as a result of these changes.

The largest revision was for Auckland, where Statistics New Zealand has estimated it had overstated its June 2018 population by 77,500 people. Among the major cities, downwards revisions only occurred in university cities, where the reductions from the original estimates ranged from a 4.8% reduction in Auckland to a 0.2% reduction in Dunedin.

Change in estimated population as at 30 June 2018 Original Revised Revision Major uban area estimate estimate Number Number Number % change Tauranga city 135,000 140,800 5,800 4.1% Hastings district 80,600 84,000 3,400 4.0% Whangarei district 91,400 93,700 2,300 2.5% Napier city 62,800 64,100 1,300 2.0% Rotorua district 72,500 74,000 1,500 2.0% Lower Hutt city 105,900 107,600 1,700 1.6% New Plymouth district 81,900 83,100 1,200 1.4% Dunedin city 130,700 130,500 -200 -0.2% Palmerston North city 88,700 87,300 -1,400 -1.6% Hamilton city 169,300 165,900 -3,400 -2.0% Christchurch city 388,400 380,200 -8,200 -2.2% Wellington city 216,300 209,000 -7,300 -3.5% Auckland 1,695,900 1,618,400 -77,500 -4.8% New Zealand 4,885,500 4,841,000 -44,500 -0.9% Source: Statistics New Zealand

The current estimates for June 2018 and June 2019 are provisional and will not be finalised until 30 March, when revised estimates based on the 2018 Census will be published for 2014 to 2019.

Manawatū region revisions

The revisions to the two councils in the Manawatū region resulted in a reduction in the estimated population of Palmerston North and an increase in the estimated population of Manawatū District. There was a reduction of 1,400 people to the original estimate for Palmerston North’s population as at June 2018 (from 88,700 people to 87,300) and an increase of 200 people to the original estimate for Manawatū district’s population as at June 2018 (from 30,900 people to 31,100)

The biggest changes to the 2018 estimates for the Manawatū region and New Zealand were for the 15 – 39 years age group. The reduction in the Manawatū region in this age group was 1,300 people, a decline of 3.1%. This revision was expected due to a decline in tertiary student numbers in Palmerston North and nationally. The only positive revision in the estimates for the region’s population was in the 0 – 14 years age group, with an increase of 300 from the original estimate.

Change in estimated population as at 30 June 2018 Original Revised Revision Age group estimate estimate Number Number Number % change Palmerston North city 0-14 Years 17,000 17,200 200 1.2% 15-39 Years 34,100 32,900 -1,200 -3.6% 40-64 Years 24,900 24,700 -200 -0.8% 65 Years and over 12,600 12,500 -100 -0.8% Total 88,700 87,300 -1,400 -1.6% New Zealand 0-14 Years 944,600 948,600 4,000 0.4% 15-39 Years 1,680,800 1,632,300 -48,500 -3.0% 40-64 Years 1,513,100 1,516,400 3,300 0.2% 65 Years and over 746,900 743,700 -3,200 -0.4% Total 4,885,500 4,841,000 -44,500 -0.9% Source: Statistics New Zealand

Manawatū-Whanganui region revisions

The revisions by Statistics New Zealand resulted in an upwards revision of 2,500 people to the June 2018 Manawatū-Whanganui population. The revisions resulted in increases in the estimated populations of five councils in the region and reductions in two councils.

Change in estimated population as at 30 June 2018 Original New Revision estimate estimate Number Number Number % change Horowhenua district 33,000 34,300 1,300 3.9% Tararua district 17,900 18,500 600 3.4% Whanganui district 45,200 46,700 1,500 3.3% Rangitīkei district 15,150 15,500 350 2.3% Manawatū district 30,900 31,100 200 0.6% Ruapehu district 12,750 12,650 -100 -0.8% Palmerston North city 88,700 87,300 -1,400 -1.6% Manawatū region 119,600 118,400 -1,200 -1.0% Horizons North-West 73,100 74,850 1,750 2.4% Horizons South-East 170,500 171,200 700 0.4% Total Manawatū-Whanganui 243,700 246,200 2,500 1.0% Region New Zealand 4,885,500 4,841,000 -44,500 -0.9%

Peter Crawford Economic Policy Advisor, Palmerston North City Council [email protected]

Contents Page number

Number of new dwellings consented by building type by quarter 3

Annual number of new dwelling consents by building type 3

Private dwelling counts (Census 2006, 2013 and 2018) 3

Dwelling count change by area unit (2013 – 2018 change) 4

Annual change in the supply of private sector rental housing 5

Rental affordability 5

Housing affordability 5

Value of non-residential consents issued by type 6

GDP Growth 6

Major construction projects 6

Background

This report has been produced to meet the quarterly reporting requirements of the National Policy Statement on Urban Development Capacity 2016. These reporting requirements apply to all medium and high growth local authorities with urban area populations of 30,000 or more people.

These quarterly reports are produced to ensure that local authorities are well-informed about demand for housing and business development capacity, urban development activity and outcomes. Indicators which local authorities are required to monitor on a quarterly basis include: a. Prices and rents for housing, residential and business land by location and type; and changes in these prices and rents over time; b. The number of resource consents and building consents granted for urban development relative to the growth in population; and c. Indicators of housing affordability.

Further information Strategy and Planning Unit Palmerston North City Council Private Bag 11034, Palmerston North 4444 Phone: 06 356 8199 3

Number of new dwellings consented by building type by quarter

Consents for 101 new residential New residential dwellings consented by quarter and building type dwellings were issued in the June 160 Townhouses, 2019 quarter, a decline of 13% 140 flats, units from the June 2018 quarter (15 and other dwellings fewer dwellings). 120 Retirement 100 village units The number of new dwellings consented in the June 2018 quarter 80 was boosted by the approval of 22 60 Apartments retirement village units.

Number of consents approved 40 (Source: Statistics NZ) 20 Houses

Jun

Sep

Dec

Mar

Sept

June

June June 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20182019 Annual number of new dwelling consents by building type

In the year to June 2019, 412 New residential dwellings consented by building type - years ended consents for new residential June 500 dwellings were approved in 451 Townhouses, 450 flats, units Palmerston North, with a value of 412 397 and other $135 million. This compares to 400 96 70 25 dwellings 361 352 26 341 Retirement 451 new dwellings in the year to 30 350 5 27 village units June 2018, decline of 39 dwellings 32 4 314 300 21 (six percent). There was a three 87 11 Apartments percent increase in the value of 250 229 219 18 198 195 197 20 200 0 consents for new dwellings. 384 9 174 12 70 172 352 158 30 3 361 6 16 328 150 313 0 25 3 Houses 276 243 Consents in the year to June 2018 217 100 206 190 Annual Annual number of consents approved 175 were boosted by the approval of 48 158 159 143 151 Council housing units at Papaioea 50 Place. 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (Source: Statistics NZ) Private dwelling counts (Census 2006, 2013 and 2018)

Census private dwelling counts Private dwelling counts in Palmerston North show 32,730 dwellings in Palmerston North in March 2018, 2006 - 2013 - an increase of 1,014 from March Dwellings 2006 2013 2018 2013 2018 2013. Changes made to the way change change unoccupied houses were assessed Total 30,378 31,716 32,730 1,338 1,014 resulted in a reduction in the number of empty houses between Occupied 28,476 29,700 30,618 1,224 918 2013 and 2018, while more houses Unoccupied: 1,707 1,914 2,016 207 102 were recorded as unoccupied because the residents were away. Residents away 687 624 1,155 -63 531 Empty 1,020 1,290 861 270 -429 The number of people counted in the city increased by 4,560 people Under construction 195 99 99 -96 0 between 2013 and 2018, suggesting an increase in the number of people per dwelling.

(Source: Statistics NZ) 4

Dwelling count change by area unit (2013 – 2018) Census dwelling counts show Change in dwellings by area unit between 2013 and growth in dwelling numbers across most area units in the city between 2018 2013 and 2018, with just five of the 2013 - 2018 change Area unit 2013 2018 40 area units for the city Number % experiencing a decline. Most of the Linton Camp 327 405 78 23.9% areas experiencing decline had a Poutoa 1,026 1,182 156 15.2% decline in the number of Housing New Zealand houses. Royal Oak 702 807 105 15.0% Whakarongo 537 615 78 14.5% Average annual growth in the Aokautere Rural 234 261 27 11.5% number of dwellings in the city was Aokautere 231 249 18 7.8% 191 between 2006 and 2013 and 203 between 2013 and 2018. Ashhurst 1,050 1,113 63 6.0% Dwelling growth in the main urban Park West 825 870 45 5.5% area has been stable, accounting Palmerston North Airport 117 123 6 5.1% for 80 % of dwelling growth in the Palmerston North Hospital 1,005 1,056 51 5.1% city. Ruahine 663 696 33 5.0%

There have been changes in where Maraetarata 531 555 24 4.5% infill housing development is Kelvin Grove North 741 774 33 4.5% occurring in the city, with the Takaro South 960 993 33 3.4% Palmerston North Hospital, Milson South 1,125 1,161 36 3.2% Ruahine and Maraetarata experiencing the highest growth Newbury 699 720 21 3.0% rates between 2013 and 2018. Papaioea North 1,122 1,155 33 2.9% Between 2006 and 2013 Terrace Ruamahanga 1,014 1,041 27 2.7% End, Hokowhitu East and Papaioea Roslyn 933 957 24 2.6% South experienced the highest infill Hokowhitu Central 960 984 24 2.5% growth. West End 1,209 1,239 30 2.5% Census 2018 data shows an Pihauatua 444 453 9 2.0% increase in housing stock in the Milson North 942 960 18 1.9% Linton Camp area unit but most of Takaro North 1,317 1,341 24 1.8% the increase is due to the correction of data for 2013, which Terrace End 1,344 1,365 21 1.6% showed a loss of 66 dwellings Awapuni South 1,257 1,269 12 1.0% between 2006 and 2013. Milverton 726 732 6 0.8% Hokowhitu East 1,224 1,233 9 0.7% Data has not yet been published Palmerston North Central 483 486 3 0.6% for the rural settlements of Bunnythorpe and Longburn. Westbrook 1,080 1,086 6 0.6% Cloverlea 756 759 3 0.4% (Source: Statistics NZ) Kelvin Grove West 936 939 3 0.3% Esplanade 834 834 0 0.0% Pioneer West 96 96 0 0.0% Tremaine 162 162 0 0.0% Highbury East 1,008 1,002 -6 -0.6% Papaioea South 963 957 -6 -0.6% Hokowhitu South 756 750 -6 -0.8% Awapuni North 1,335 1,323 -12 -0.9% Turitea 42 27 -15 -35.7% Palmerston North City 31,716 32,730 1,014 3.2% 5

Annual change in the supply of private rental housing

There were 18 more active Annual change in the number of active residential rental bonds (years ended June) residential rental bonds in 450 Palmerston North registered by the 400 381 389 Ministry of Business, Innovation 362 and Employment (MBIE) at the end 350 of June 2019 compared with June 300 2018. 260 267 250 237 230 220 198 Annual growth in the number of 200 180 145 residential rental properties in the 150 125

City has slowed since peaking at 100 89 389 in the year to June 2009. 68 63 50 19 18 (Source: MHUD) Annual change the in number of active bonds 0 -22 -13 -50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Rental affordability

Rental affordability in Palmerston Rental Affordability North deteriorated slightly between (Infometrics) June 2018 and June 2019. New Zealand A higher ratio means 0.36 less affordable Average rents increased from Hastings District 28.0% of average annual salaries Dunedin City 0.34 and wages in June 2018 to 28.3% New Plymouth District in June 2019. The affordability Palmerston North City score for New Zealand was 35.3% 0.32 in June 2019.

0.30 (Source: Infometrics)

0.28 Average annual annual Average to rent annual average wage ratio 0.26 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Housing affordability

Housing affordability in Palmerston Housing Affordability (Infometrics) North deteriorated between June 12 A higher ratio 2018 and June 2019. Average means less New Zealand house values increased from 7.1 11 affordable Hastings District times average annual salaries and New Plymouth District 10 wages in June 2018 to 7.6 in June Dunedin City 2019. The affordability score for 9 Palmerston North City New Zealand was 10.9. 8 (Source: Infometrics) 7 7.6 7.6

6 House Value House Wage Value Average Ratio to 5

4 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 6

Value of non-residential consents issued by type

The value of non-residential Non-residential building consents issued in Palmerston North ($ million, years ended June) consents issued in the year ended 140 June 2019 was $93 million, a 128 Farm buildings 117 decline of 27% from 2018. 120 Factories, industrial, & storage buildings The largest contributors to 100 Office, administration, & 93 public transport buildings consents in the first half of 2018 86 86 86 Shops, restaurants, & 80 were Food HQ, BUPA retirement 75 73 bars village (apartments and care Social, cultural, & $ million 60 56 58 religious buildings service building) and Toyota 54 45 Education buildings 44 40 warehouse expansion and 40 strengthening. Hospitals, nursing homes, & other health buildings 20 (Source: Statistics NZ) Hotels, motels, boarding houses, & prisons 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 GDP growth

Infometrics GDP estimates Annual change in Gross Domestic Product (Production Measure) suggest Palmerston North GDP 7% growth over the 12 months ended 6% New Zealand June 2019 was 2.3 %. 5% Palmerston North GDP growth is expected to 4% strengthen over the remainder of 3% 2019 and in 2020 as work begins 2%

on major construction projects in 1% Annual Annual Change the City and region. 0%

(Source: Infometrics) -1% -2%

-3%

Year ended Major construction projects

Major development and Development $ million Timing construction projects announced Manawatū Gorge 650 start 2020 for Palmerston North and the Linton and Ohakea regeneration plan 397 2018 - 2030 Manawatū region amount to more Mercury Energy - Turitea 256 start August 2019 than $3.0 - $3.5 billion of Massey University capital plan 184 2016 - 2025 construction activity over the period to 2030. Powerco growth and security projects 150 2017 - 2024 Hokowhitu campus redevelopment 90 - 135 start 2019 Some projects under development P-8A Poseidon aircraft - infrastructure 300 finish by 2022 do not have final values for the NZTA regional roading investment cost and timing to be confirmed project, such as the construction BUPA retirement village 40 started 2017 of the KiwiRail freight hub and KiwiRail regional freight hub cost and timing to be confirmed MidCentral investment plan. MidCentral DHB investment plan 282 timing uncertain

(Source: Palmerston North City Council) PNCC urban growth capital projects 48 2018 - 2028 PNCC city centre streetscape upgrade 29 2018 - 2028 Arena Master Plan 25 2018 - 2028

Published by Palmerston North City Council, October 2019