Although a few mum-and-dad developers have taken on intensification projects, we’re seeing that most are undertaken by professional developers given such projects can be fairly daunting to plan, permit and execute.
The growth being seen by ANZ is supported by data from Statistics New Zealand which shows that in 2020 “other dwellings” (which includes apartments and townhouses) accounted for 61% of Auckland residential building consents, up from 44% in 2016.
The total number of residential consents are increasing around 2000 a year with around 80% of that increase occurring in Auckland.
According to Auckland Council, more than 16,500 new dwellings were consented in Auckland in 2020, with 1525 consented in December alone, making it the strongest December on record.
Along with small terraced developments, we’ve seen more suburban apartment projects over the past two to three years. These will typically have a smaller number of units than CBD apartment buildings.
As well as the Unitary Plan and higher property prices, these developments seem to be driven by changing demographics.
As home owners in more affluent suburbs retire and look to downsize, new developments give them the options of less space and less maintenance while remaining in their community – not to mention being able to bank the difference between the sale price of their larger house and the cost of a smaller one.
After several years where activity was relatively subdued new subdivision projects are proceeding in larger numbers.
There have been relatively few new subdivision projects in recent years while the market dealt with an overhang of vacant sections.
However, the strength of the market has seen builders moving to secure pipeline and there is now strong demand for sections.
Given the space requirements, these are typically greenfields developments located further out of Auckland in areas such as Papakura, Takanini, Karaka in the south or Westgate, Hobsonville, Redhills in the west.
While it varies from project to project, these projects are typically more than 50 lots which will be sold to house builders.