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.
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.
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.