Housing Assessment for the Auckland Region Mario A
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Housing Assessment for the Auckland Region Mario A. Fernandez, Chad Hu Jennifer L. R. Joynt, Shane L. Martin, Isobel Jennings July 2021 Housing assessment for the Auckland region Mario A Fernandez Chad Hu With Jennifer L R Joynt Shane L Martin Isobel Jennings July 2021 Auckland Council National Policy Statement on Urban Development 2020 ISBN 978-1-99-100246-4 (Print) ISBN 978-1-99-100247-1 (PDF) This report has been peer reviewed by the Peer Review Panel. Review completed on 28 July 2021. Approved for Auckland Council publication by: Name: Megan Tyler Position: Chief of Strategy Name: Jacques Victor Position: Manager, Auckland Plan, Strategy and Research Department Name: Eva McLaren Position: Manager, Research and Evaluation Unit, RIMU Date: 30 July 2021 Recommended citation Fernandez, M. A., C. Hu, J. L. R. Joynt, S. L. Martin and I. Jennings (2021). Housing assessment for the Auckland region Endorsed by the Auckland Council Planning Committee, July 2021. Cover image credit: Apartment buildings, Stonefields, Mt Wellington, Auckland. Photograph by Jay Farnworth. © 2021 Auckland Council Auckland Council disclaims any liability whatsoever in connection with any action taken in reliance of this document for any error, deficiency, flaw, or omission contained in it. This document is licensed for re-use under the Creative Commons Attribution 4.0 International licence. In summary, you are free to copy, distribute and adapt the material, as long as you attribute it to the Auckland Council and abide by the other licence terms. Acknowledgements Auckland Council Spatial Analysis and Modelling Team Mike Oberdries, Oberdries Consulting Ltd With special thanks to: Chloe Trenouth, Director, Hill Young Cooper Ltd. Peer reviewer Kyle Balderston, Team Leader, Urban Growth and Development, Otago Regional Council Doug Fairgray, Director, Market Economics Ltd David Norman, Executive Advisor, Economics and Business Cases, GHD Auckland Council: Pania Elliot, Policy Manager, Community and Social Policy Shyamal Maharaj, Economist, Chief Economist Unit Claire Gray, Principal Advisor, Growth and Spatial Strategy Ross Wilson, Economic Analyst, Economic and Social Research and Evaluation Team Auckland Council Development Programme Office We would also like to acknowledge the advice, feedback, encouragement and constructive comments from across Auckland Council and the wider planning and development community in the undertaking of this assessment. _____________________________________________________________________________________ Housing assessment for the Auckland region iv Executive summary In August 2020, the National Policy Statement on Urban Development (NPS-UD) came into effect with the purpose of boosting the competitiveness of the housing and urban markets as a mechanism to improve access to affordable homeownership through better planning decisions. As part of evidence-based decision-making, the NPS-UD requires that the Auckland Council develop a Housing and Business Development Capacity Assessment (HBA) that provides information on the demand and supply of housing and business land, over the short, medium, and long-term, and the impact of council’s planning and infrastructure decisions. The NPS-UD is prescriptive in nature and shares commonalities with its predecessor, the National Policy Statement on Urban Development Capacity (NPS-UDC) 2016, but does not provide details for implementation. The NPS-UD differs from its predecessor in that it provides space for users to refine the terminology used and develop appropriate assessment methods, tailored to the context of individual territorial authorities. Since the adoption of the Auckland Unitary Plan (AUP), Auckland’s annual dwelling supply has reached an all-time high, and the latest consenting data from the council and Stats NZ shows this increase continuing. This HBA is the latest in a long series of housing and business development capacity supply monitoring work for Auckland, and aims to meet the requirements of the NPS-UD. It builds on previous monitoring work by analysing the impact of housing supply on housing affordability, that is, it assesses affordability through the lens of ordinary home buyers who are experiencing increased difficulty in entering the housing market. However, there are aspects that are not included in this HBA and are left for future assessments and research. The key findings and implications of this HBA are summarised below. Development capacity 1. Total net infill development capacity is 101,649 dwellings and the total net redevelopment capacity is 909,179 across Auckland’s urban zoned land. If all suitable sites are all redeveloped to the maximum as enabled by the plan, Mixed Housing Urban and Mixed Housing Suburban combined could provide 678,851 additional dwellings or 75 per cent of the total net redevelopment capacity. 2. If development potential is maximised, Franklin and Howick local boards provide 28 per cent (28,310 dwellings) of the total net infill capacity. The combined areas of Henderson-Massey and Howick have the potential to supply 23 per cent (210,556) of the total net redevelopment capacity. 3. To identify capacity that is commercially feasible, two capacity scenarios are used – the maximum percentage of profit yield and the minimum priced dwelling units _____________________________________________________________________________________ Housing assessment for the Auckland region v scenarios. Approximately 840,000 dwellings are commercially feasible for the maximum percentage of profit yield scenario, where the average sales price is $1.66 million and terrace housing comprise most of the feasible typology. Under the minimum priced dwelling scenario, about 1.4 million dwellings are commercially feasible, where the average price is $1.04 million with an average floorspace of 107 square metres. Apartments and terrace housing comprise over 84 per cent of the feasible dwellings tested under the minimum priced dwelling scenario. Infrastructure-ready 1. Water supply, wastewater, and stormwater infrastructure, at a network (bulk) infrastructure level, is broadly adequate to cater for projected growth over the short, medium, and long-term. Land transport capacity is not included in this HBA and ongoing work to develop land transport assumptions will be included in the next HBA. 2. The initial assessment of the bulk water supply and wastewater networks indicates that of net plan enabled capacity, 57 per cent is infrastructure ready in the short-term, 77 per cent in the medium-term, and 99 per cent in the long-term. 3. Although constraints exist within the existing networks, projects funded through the Long-term Plan and identified in the Infrastructure Strategy will continue to unlock further development capacity across the region. This assessment is not required to, and therefore does not, take into account local infrastructure requirements (which is usually developer built), and may play a significant role in enabling growth in specific areas. Competitiveness margin 1. The expected level of residential demand plus the relevant competitiveness margin over the next 30 years ranges from 332,000 to 384,000 dwellings. It is anticipated that the short-term (including 20 per cent margin, year 0-3) growth is approximately 36,000, the medium-term (including 20 per cent margin, year 3-10) growth ranges from 88,000 to 104,600, and the long-term (including 15 per cent margin, year 10- 30) growth ranges from 200,000 to 207,000. Demand and sufficiency of capacity 1. The primary objective of the NPS-UD is to test the sufficiency of development capacity to meet growth demand over the next 30 years. The HBA findings have identified both the plan-enabled development capacity and the feasible development capacity are sufficient to meet the projected growth demand plus competitiveness margins. It is acknowledged that some development capacity is infrastructure _____________________________________________________________________________________ Housing assessment for the Auckland region vi constrained at the bulk network level which the council is addressing though planned investment in the Long-term Plan and Infrastructure Strategy. 2. Delving deeper in the housing demand-supply paradigm, this HBA uses the concept of intermediate market households as a benchmark to assess the affordability aspects of the competitive market due to the influence of the NPS-UD (i.e., greater releases of land capacity). The intermediate households consist of private renter households and the level of income required to affordably pay the mortgage on a dwelling purchased at the lower quartile dwelling sale price. Required income is $132,300 for a sales price of ($770,000) (Mitchell 2019, 2020). 3. Two additional demand scenarios are constructed to provide detailed analyses for the short and medium-term – the likely and the high-growth scenarios over the next 10 years. Relative to 2021, in 2026 and 2031 about 41,000 and 77,000 additional households will demand a dwelling under the likely scenario; and, about 58,000 and 110,000 in the high-growth scenario. 4. In 2021 intermediate households numbered 97,156 and 104,128 households for the likely and high-growth scenarios respectively. By 2031 there will be approximately 9600 additional intermediate households demanding a dwelling under the likely scenario; and, about 32,600 in the high-growth scenario. 5. To assess the sufficiency of affordable housing development capacity, five supply scenarios are constructed to represent the whole spectrum