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Changing housing trends starting to be noticed

On Monday there were a series of interesting articles in the Herald on housing that have a lot in common with many of the things we say.

A general statement about the current urban trends

Although apartment living has been available to Aucklanders for many decades it is only relatively recently that it has become desirable.

Similar large cities around the world have long recognised the benefits large resident populations in high-rise apartments bring in rejuvenating previously run-down, and often abandoned, central suburbs.

While Auckland may struggle to recreate the cosmopolitan atmosphere of major cities such as New York, Paris and London, it is already moving in that direction. Developments such as the Wynyard Quarter, with its wide pedestrian boulevards and range of restaurants and entertainment areas, are helping to entice potential apartment dwellers downtown.

Pedestrians are being given more priority in the central city, and public transport facilities are improving, making the prospect of going without a car less scary than it would have been even a decade ago.

The vast majority of Aucklanders will continue to sprawl across the length and breadth of suburbia, but even in the outer suburbs population pressures will see the city growing not only outwards but also up.

I think that last point is quite important. Even with massive development in apartments or other types of intensified living the majority of people will still be in typical suburban homes. Intensification won’t change that but it will give those that want it more options.

On first home buyers

For first home buyers, the LVR and a heated property market have made the search for an affordable suburb difficult. But they shouldn’t despair. We’ve found the next generation of Ponsonbys and Grey Lynns. And guess what? Transport’s the key.

Ponsonby and Grey Lynn are beyond the reach of many first home buyers but there are plenty of affordable suburbs further afield. What’s made these outer suburbs – previously dismissed as either too far from the central city or too suburban to consider – more attractive propositions are improved bus, rail and motorway links.

Not everyone needs to travel into the CBD. In some cases new motorways will make it easier to live in, say, Swanson and work in South Auckland. The bus-only lanes on the Northern Motorway have made living somewhere such as Albany or Silverdale a realistic choice. Buses take less than half an hour to reach downtown, stopping infrequently and dropping passengers at the bottom of Queen St.

The upgrade of suburban rail and bus hubs such as Panmure, and the imminent introduction of new electric trains, further raises the appeal of nearby suburbs. And Queen St is no longer the preserve of a decent cup of coffee – hundreds of cafes have opened in the suburbs, helping to rejuvenate many suburban shopping centres.

I think that the current suite of transport projects – both road and rail – are going to have a massive impact on how we get around. Waterview is obviously the completion of the motorway network while on the PT side of things the transformation is probably even larger as we have the big three of electrification, new bus network and integrated ticketing/fares underway along with a lot of other, smaller stuff like a focus on improving the customer experience.

Of course from the same article clearly not everyone gets it with it quoting economist Rodney Dickens saying that instead of intensification we should be focusing on housing on the fringes so they can live and work locally.

“People living and working locally makes economic sense,” he says, although this is already happening to some degree in areas such as Silverdale in the North, and Takanini and Weymouth in the south.

That’s all very nice in theory but it misses a few key points. First is that there are actually very few jobs out on the fringes. In fact 49% of all jobs in the Auckland region are with the boundaries of  the old Auckland City Council area. Even if we put a lot of effort into growth of employment in the fringes there still wouldn’t be anywhere near as many jobs as there are residents in those areas so people commuting is not going to disappear. Going further it’s also important to think not just about the number of jobs in an area but the kind of jobs they are.

CBDs by their very name are central and therefore generally have a much wider catchment to choose staff from.  Businesses on the fringes limited to local employment – especially those that require specifically skilled staff will simply not have as many potential employees to choose from which can limit their businesses. That means the types of employment found on the fringes is likely to end up being quite a different to that found more centrally. As an example, I wonder how many jobs Rodney would be able to find as an economist in Silverdale, Takanini or Weymouth. This is issue is also exaggerated by the fact that even if one person manages to find a job locally, their partner may not be able to and therefore have to travel.

On Apartments and intensification

As Auckland’s population increases so the range of apartments spreads, and already there are large apartment projects in suburban areas such as Manukau, Ellerslie, New Lynn, Mt Wellington and parts of the North Shore.

Higher density living is provided for in the Auckland Council’s Unitary Plan, which provides for zones where terraced housing and apartments can be built. Controversial though these planning changes have been, it is difficult to escape the need for Auckland to start moving skywards instead of continuing to sprawl. Some of this future development has already taken place around railway and bus transport hubs. Once the apartments sprout up, along with them come retail and food outlets and amenities, creating new communities.

“Predictions a year ago that demand for central city apartments was increasing to the point where developers would have confidence to start building new projects, have proven correct, and several major new complexes are under construction.”

Property experts warn against making sweeping judgements about what, in fact, are a series of complex markets, each with their own dynamic. They are encouraged by the developments providing more up-market apartments in the city and its fringes. There could be as many as 3000 new apartments available on the market during the next 18 months, bringing the total number of apartments in the city and inner suburbs to more than 20,000. Of course the price of the new apartments will be much higher, with apartments in the new developments starting around $450,000.

Of course we’ve been tracking apartment developments in our Development Tracker for a while now and started doing so after seeing so many new proposals popping up all over the place. We have also seen developments starting much less than $450k although there has definitely been a noticeable amount of higher end apartments. It really seems that we’re missing decent middle of the range options. My guess is that over the next economic growth cycle we will see a huge amount of apartment (and more moderate intensification) developments occur.

And lastly on Affordability

The head of hometopia.co.nz, Stephen Hart, said people will still want to live close to town and consider apartment living but satellite suburbs were also being considered.

“The transport systems are likely to improve to these outlying suburbs and they can get a house and section we only dreamed about – we can’t even do that in Mt Wellington or Panmure now.”

He still thought places like Papakura and Whangaparaoa were too far for most city workers to consider. “Some people are doing it but it’s not a trend, in my opinion.”

The report’s writer, Tony Verdon, says the newly developed areas will not appeal to all younger buyers, many of whom would prefer to live closer to Auckland’s centre.

“But increased pressure on Auckland prices will force many to these newer developments on Auckland’s expanding urban fringe.”

So people are really wanting to be more central but are only really choosing to live further out because that’s the only options for them.

Of course this year could see a lot change. Interest rates are starting to rise and the impact being felt sooner due to more people having floating mortgages than in the past. Dwellings with good PT, walking and cycling options that allow people to reduce their transport costs are likely to do quite well compared to those for which the only option is to drive.

Housing Affordability and Transport costs

42 comments to Changing housing trends starting to be noticed

  • mfwic

    I think the reason there are fewer apartments in the mid range is that the supply has followed demand. The demand curve has always had a gap in the middle with plenty of demand for cheap small apartments and some demand for high priced apartments for people who are sick of gardens and lawns etc. But the middle part of the demand curve is missing because these people are in the suburbs raising kids. You can do that in an apartment in the CBD but it is harder.

    • Sailor Boy

      You can do that in an apartment a lot easier if it is in a suburban centre though. The real reason thst they don’t exist is thst we haven’t allowed them to be built

    • mfwic

      The latest series of This Old House on Sky is the renovation of a 4 storey Brownstone in Brooklyn. They showed how one floor had been two tiny flats and they were changing it back to part of the house. There will be a garden flat, 1st and 2nd floor as one house and top floor as a flat. What was interesting was the flexibility they seem to have to reconfigure as flats or larger houses depending on the owners needs and circumstances. Part it is relaxed regulation and part that these buildings are so well built structurally that you can change things around. But having one owner for each brownstone means you don’t have to be mucked around by bodycorporates or cross lease neighbours. The owners can then rent out the parts they need to to fund the mortgage. It avoids negative externalities and means a lot of people can be housed in each neighbourhood. And four storeys looks great without being intimidating. Pity we can’t get something similar going.

      • Steve D

        Yeah, it’s wonderful that old buildings like that can keep being useful, no matter what changes have happened over the years. It is an issue that worries me about the proliferation of unit title: it’s basically impossible to redevelop later, if the configuration is no longer suitable.

        I understand Singapore allows some changes to unit title buildings to go ahead with something like 90% support, rather than unanimous, which can help. It’s not inconceivable for New Zealand – we have very strong property rights protections, but it’s vaguely in the ballpark of things like the takeovers code, which also allows a compulsory takeover for listed companies where someone owns more than 90%.

        But a better solution is to allow more different types of buildings, so that more people can own freehold, rather than being limited to unit title/cross lease. Interesting related reading: http://oldurbanist.blogspot.co.nz/2014/03/housing-dreams-american-and-mexican.html

        Unfortunately, the Unitary Plan is going in exactly the opposite direction – allowing more density, but only with large developments on large lots. Even the “freest” zone, Commercial Mixed Use, has a minimum lot size of 200sqm which is pretty big, really. There’s existing detached houses on sites smaller than that, let alone denser townhouses (in the North American sense of “townhouse”). You’d be pushing shit uphill to try to do a proper fee simple subdivision with vested roads with small lots and narrow streets. Much easier to do the same thing, but call the houses “units” and the streets “driveways”. The built form is the same, but the legal form is going to be a pain later on.

    • nonsense

      the problem is not really the apartment but the CBD. we live in a nice apartment in the cbd but now that we have a baby we have to move somewhere more family friendly because in the CBD there’s nothing like community and sttuff. In the end we always have to take our neglected car to go to plunkett or similar (not to talk about schools later) so we might as well get out to where there are already some services. Doesn’t help of course that cars comes first in the cbd and going around with a pram is no fun. Try crossing tangihua st. scary.

      • Chris O

        I won’t disagree with you on the current situation nonsense. The CBD housing apartment was dominated by small apartments for students, plus some “luxury” developments such as in the Viaduct. There haven’t been many developments in the CBD aimed at the family market. It’s not necessarily destiny that the current demographics will stay that way. Downtown Vancouver has become so popular for families that they’ve had to build a couple of new schools.

        The irony is that while high-rises in the CBD will get the most attention, the most potential in terms of densifying Auckland is probably in the low-to-medium rise developments in the suburbs (eg city fringe, along transit corridors and so on).

  • Dennis

    Immigrants arrive in nz to obtain better living conditions that includes a house on its own land. Not a 75sqm apartment with low ceilings, high rates, high body corporate , shoddily built and often more expensive than house. Yuk.

    They have no desire to raise their families in a chicken coop.

    Not surprisingly many kiwis feel the same way. Apartments are ok for singles, childless couples and retiring baby boomers as transient accommodation.

    Let the people decide not the planners. What’s this obsession with pokey high rise accommodation.

    • Frank McRae

      “Let the people decide not the planners.”

      Exactly. Any form of housing other than large free standing homes on a large lot is severely restricted by planning regulation in New Zealand. This is one of the key reasons why our housing is so expensive. We should liberalise these planning rules and allow people to have greater choice.

      Don’t make presumptions about what other people want based on your own preferences.

    • TimR

      Funny that. As a father of two kids under 4 I’d happily live in a CBD apartment if I could get that missing “middle range” model. As a father I value time with my kids and would happily shorten my commute and pass on the mowing chores to increase that time. Unfortunately, no suitable choice available. And yes, I’m a (moderately) recent immigrant.

      Please don’t stereotype others as holding your worldview. I would like to determine my life choices, not you.

    • TimR

      One more observation to add, in anticipation of the old “kids need gardens” red herring. The family often drive into Wynyard to access the best kids playground in the city. Add to that Vic park, the domain, Albert park, tamaki drive and various sports fields (the list goes on) and you get the picture. Sure my kids are young, but Im bringing them up to explore and get out, not just mollycoddling them in the backyard. Besides which, have you seem how small gardens are in most new developments these days? All massive house for the play station generation, nothing left of the dream of suburban outdoor space there…

    • Sailor Boy

      Dennis I recently moved out of home. I never even considered a house because the idea was so foolish to me. I want to raise kids and get married and still live in apartments. Why do planners like you want to force me to live in a house?

  • Neil

    This blog and its readers appear to be very white middle class. For those without a degree, there are almost no jobs in the CBD except waiters and shop assistants. For the 60% who don’t get a degree, jobs tend to be in Penrose, Rosebank Rd or Manukau. The lack of jobs in Rodney, Waitakere and North Shore was because those councils didn’t want ugly, possibly dirty factories near their nice houses. As someone who employed office staff in East Tamaki, we were always overwhelmed with people who wanted to work near where they lived.

    • Really? Wow I better tell all the legal executives, secretaries and other support staff at my CBD law firm (and all the other CBD law firms) who make up about 25% of our employees that they have to go and work in Penrose or East Tamaki.

      Along with all the non-degree qualified people who work at Vero, Lumley, AIG, IAG, ASB, ANZ, Westpac, Southern Cross and all the other large corporates around the CBD. I dont think they will be too happy. They seem to enjoy working in the CBD and having a central location well served by public transport to go to.

      Your opinion sounds like that of a disgruntled rural person who is really annoyed that people keep wanting to live in cities. Do you ever actually come to the CBD and see all the people who work here?

      So you only employ people who live near East Tamaki? Or do you also employ people who have to travel across the city to work?

      • Play the ball Goosoid not the man….

        There are generalisations in there but there are also pointers sitting in there as well that can be fleshed out – especially to our industrial complexes as the large roll they play in Auckland

      • James

        I think you would find it pretty hard to argue against the idea that the majority of blue-collar jobs, so to speak, are almost all located outside the inner city…

        • Bob

          South Auckland workers, blue or white collar, are less likely to want to work in the CBD. Their preferred workplaces are the airport and East Tamaki or closer to home. The workplace I was at in Highbrook employed mostly people from South (even as far as Pukekohe) with few from West and North. When I worked in the CBD I hated the commute into town from Sth Auckland, and many workers at my workplace there were from North and West with fewer from South Auckland. Most people would prefer to not travel for more than 30 or so minutes to get to work.

      • Neil

        44% of Aucklanders were of a non-European ethnic group. Does your CBD legal office reflect this?

        • No it doesnt – unfortunately Maori and Pacific Island lawyers are very under represented in private law firms (but do figure prominently in government departments and other public organisations). We do however have Asian lawyers and Maori and Pacific Island support staff. That is pretty typical of the legal industry – again unfortunately because some diversity would be nice.

          However, there are certainly many, many non-Pakeha people working in the CBD as I can see walking down Queen Street every day. A lot of Asian and Indian NZers but also Maori and Pacific Islanders.

          But your point was about non-degree qualified people working in the CBD. Are you now saying that the CBD somehow discriminates against non-Pakeha people? I just dont think that is the reality. There are workmen on the building next to me right now and they are practically all Maori or Pacific Islanders.

          I will ask again, when was the last time you spent any time in the CBD – especially during working hours? I find a lot of suburbanites never come in here and so have all these preconceptions from what it was like 20 years ago. A lot has changed.

          • Neil

            Thanks for your reply. I live in St Johns and am in the CBD regularly, particularly downtown. You are correct that many suburban residents rarely travel into CBD, but equally most CBD professional staff never have travelled into South Auckland and Waitakere. I am not talking Otara Markets but Clendon and Meadowlands.

          • Neil I go to these kinds places when I can as I am very interested in all urban conditions, and do get the opportunity, but what I find in these uber suburban single use areas is, of course, that there is little to attract anyone to them that doesn’t live there [or is as curious about the built environment as I am]. No surprise, this is supposed to be their virtue after all: quiet, separate, away-from-it-all. This is in contrast to the city centre which has attractions at different times for everyone, expects all kinds of people to turn up if it interests them and is by definition ‘the centre’ of Auckland’s identity and activity. Of course it not the only centre of activity, but it is certainly, by any measure the dominant one.

            I don’t think we should be surprised if most people usually don’t go to suburbs with few attractions that they don’t live in.

          • Neil

            Hi Patrick, I don’t expect people to go to such suburbs to enjoy the amenities, but my experience is that people make decisions that impact these outer suburbs without ever having been to them, let alone engaged with the inhabitants to understand them.

    • I am inclined to agree with you Neil on your points about those without a degree and the state of our industrial complexes.

      I would also add East Tamaki, Wiri and Takanini to your list in where “those” jobs tend end up as they too (especially Wiri) are large employment centres focused around again our industrial complexes.

      Yes when given a choice people do want to work closer to where they live. It can either be in our industrial complexes, office parks (Highbrook and Penrose/Ellersile) or our centres. This is why I have stressed to Council quite vigorously (and to their agreement) through various means the importance of making sure we develop our Metropolitan Centres and our Industrial Complexes (this includes new sites such as Drury South) properly. Regulars here at TB can say what they like about the CBD but I have seen numerous commentary from people like Rod Oram about the risk the CBD runs and has (owing to the fact Port of Auckland is the sole thing keeping it all ticking over down there). People like Oram and even Local Board members from around Auckland acknowledge our engine rooms lay with Penrose, Wiri, East Tamaki and (just for Patrick) Manukau especially in terms of that all important export revenue.

      Thus again we need to watch and develop these Metropolitan Centres (New Lynn, Henderson, Westgate, Takapuna and Albany are the North Shore and Waitakere’s Metro Centres) and our industrial sites very carefully for that 60% and those who want to live and work local like I do (and enjoy it).

      Sadly though I can not see large industrial complexes establishing on the Shore or out West – they are most likely to be contained to Wiri, Drury South and for now Penrose/Onehunga. So we need to find otherways to facilitate employment in those areas that do not have access to the industry South Auckland enjoys

    • John Polkinghorne

      Living in the CBD and working elsewhere in the city is actually pretty good – you’re going against the main commuter flows, so it’s usually a pretty sweet run, whether by car or public transport.

    • Neil – you will notice in the post I mentioned that 49% of jobs were in the old Auckland City Council area, that isn’t just the CBD but also includes the large employment areas of Mt Wellington, Penrose, Onehunga, Otahuhu etc. Those areas are also no where near the fringes and there isn’t any free land around them to build new houses for a short commute.

      • There is however plenty of opportunity to rebuild more intensely in many of these old suburbs to provide dwelling options close to employment with good transit links to further work or study and much more affordably. Especially around the high frequency transit nodes in places like Papatoetoe; lots of old very low density struggling retail and and shabby commercial with oceans of car parking around the station that with the right zoning should attract both state [housing corp] and private mix use development. Something I think the Council should be driving in PPPs; mixing assisted housing with market dwellings.

        Given the frequency and quality of service coming to both Rail and Bus there it would be more than possible to live and work with very low car use in places like this. And while travel to work or study to the City or Newmarket will certainly be well served so will trips to the Airport, Manukau City, Manurewa, GI, and West Auckland etc…. So the money saved by every member of the household no longer having to drive everywhere means a better dwelling becomes more affordable for more. Transport and Housing costs are two sides of the one coin.

        This sort of redevelopment is also what these old mainstreet centres need too; more locals, more vitality, both commercial and cultural.

        • mfwic

          I think you are right Patrick. I would include Sylvia Park as an ideal place for apartments as you are close to employment, shops, rail and buses. But I cant understand the Council supporting parking maximums in these places as some people will need to own cars and hopefully when they are not using them and walking, cycling or using PT they will have enough carparks to leave their cars in. It seems to me that parking constraints will only serve as a disincentive to building and buying in these areas.

          • Really? You don’t understand the value of parking maximums? Are there maximums at SP?

          • Steve D

            mfwic: the maximums proposed for SP (and other metropolitan centres) are two cars per dwelling, plus an extra visitor space for every five units.

            It seems pretty implausible that very many apartments would have three or more parking spaces provided anyway. Existing apartments that don’t have maximums rarely provide more than two parks/unit, even in less-walkable suburbs with fairly average PT.

  • Anthony McBride

    I think a quite a few parts of Auckland with its new industrial areas is actually pretty nice……Oh well.

  • obi

    “He still thought places like Papakura and Whangaparaoa were too far for most city workers to consider.”

    The western end of Whangaparaoa is only 25km from the CBD. I’ve commuted further than that across London. Plenty of people commute in to Wellington from Paraparaumu and Waikanae and they are around 50km from the CBD. This isn’t a hard transport problem to solve. All the discussion of a North Shore rail line seems to terminate it at Albany. Proposals to extend the busway terminate at Albany. Why not build the busway or rail to at least Whangaparaoa? Brown promised to build the CBD rail tunnel, rail to the airport, and rail across the harbour and up the Shore. Two of those promises seem to have vanished in to thin air. They might not have funding, but why aren’t the mayor and council at least presenting us with some conceptual designs and an idea of when they’d like to start construction?

  • HV

    CBD high rises are swarming with Asians! They come here for a better standard of living, but live in shoeboxes. #cray

    • Sailor Boy

      Maybe it is because those people don’t associate dwelling size with quality of life? Maybe the cleaner air, higher social mobility, better employment laws snd political freedom is what they associate with quality of life.

    • nonsense

      I bet we shoeboxers (if 75sqm complies) have more open air time than suburbans. More contacts with human beings and occasions to socialize. I know of many people whose only time under the open sky is if they have a sun roof in their car.

      • mfwic

        More contact with other people? Sounds awful to me. “L’enfer, c’est les autres,” Jean-Paul Sartre

        • harrymc

          Sartre was a misanthrope – and a self-loathing misanthrope (but then most inevitably are).

          • mfwic

            Its just the stupid ones I don’t like. Sometimes I think of how stupid the average person is and then I remember that half of them are even more stupid than that.

    • harrymc

      “Swarming” – I find your terminology offensive and borderline racist.

  • Changing housing trends, and from Houston; the sprawlista’s poster child:

    Peak Sprawl!

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