A review of building consents issued in the Auckland Region over the 6 years 2011 to 2017 provides some pointers as to the nature and extent of ‘affordable’ forms of intensification.
Overall (and setting aside retirement village units as a separate market-sector at this point), stand alone houses have dropped from 85% of all house, apartment and townhouse units consented in the Auckland region in 2011 to 54% in 2017 (based on November years).
Figure One: Share of residential building consents, Auckland Region, by type of dwelling
Apartment units form 24% of dwellings consented in 2017, while townhouses, flats and other units represent a 22% share of the dwellings consented.
The above figures are for the whole of the Auckland region. Narrowed down to the existing urban area, it is likely that apartments and flats will be a higher proportion. Sub regional data on building permits issued is only freely available at the Ward level. Just looking at the main urban Wards, in the 12 months between October 2016 and November 2017, 44% of dwelling units consented were stand alone houses, 26% were apartments., 22% flats and 8% retirement units.
| Type | Number | Percentage |
Houses |
3881 | 44% |
| Apartments | 2338 | 26% |
| Retirement village units | 678 | 8% |
| Townhouses, flats, units, and other dwellings | 1974 | 22% |
| Total | 8871 | 100% |
How Stats NZ classify a residential dwelling as a ‘town house, flat or unit’, rather than an ‘house’ or an ‘apartment’ is not clear. Their website says that examples of townhouses, flats, units and other dwellings include granny flats, and minor dwellings such as studios. Stats NZ say houses are houses not attached to other houses, so terrace houses are presumably in the townhouses, flats and units count (horizontally attached units), while apartments likely mean vertically attached units.
Apartments have increased their market share the most over the 6 years, but the pattern of growth is pretty similar for townhouses, flats and units.
In terms of absolute numbers, the following stacker graph shows how annual consents for dwellings have gone from 3,000 in 2011 to around 9,500 in 2016 and 2017 (with retirement units on top of this, taking the total to over 10,000 in 2017).
Figure Two: Number of residential building consents issued, 2011 to 2017, Auckland Region.
The number of consents for stand alone houses dropped by around 550 between 2016 and 2017.
So more intensive forms of development are now over half of the new building stock in the urban part of the city (55% of new units) which sounds positive. However as previously noted, apartments are not necessarily cheaper than stand alone houses.
The following graph shows average build costs as recorded by building permits.
Figure Three: Average build cost by type of dwelling unit, 2011-17, Auckland Region
In terms of the cost of building, the average build cost of town houses, flats and units is about 50% of that of a house or apartment. It is interesting that the build cost of an apartment unit is now about the same as a house. The cost of building an apartment has shot up over the past 6 years. Others have noted that there has been a shift in the apartment market away from smaller, cheaper units aimed at investors to larger, more expensive units aimed at owner-occupiers.
So the average house now costs something like $460,000 to build. This is (I think) before site works, fees and charges and developer's margin. Add those in and costs may be closer to $600,000. Then you need to add land.
But you do not have to build a large house, It could be a more modest townhouse, flat or unit which may cost (all up) closer to $350,000 to build.
The average floor area of the three different types of dwelling units are quite different, while the cost to build per square metre also varies.
Looking first at floor area, the average floor area for houses has been steady at around 230m2 over the period 2011 to 2017.
Figure Four: Average floor area by residential dwelling type 2011 -2017, Auckland Region
Apartments and townhouses/flats/units are about half this size, between 100 and 120m2 respectively. I presume the average floor area for apartments is a gross area that covers the internal floor area of the apartment, as well as common areas like lobbies and corridors. The average floor area for a house presumably also often includes an attached (internal) garage, which could easily be 40 or 50m2.
In terms of construction costs per square metre, townhouses, flats and units have the same build cost as houses. Apartments have seen a big rise in costs per square metres.
Figure Five: Average build cost per square metre, 2011 to 2017, Auckland Region
The rise in the build cost be square metre for apartments may reflect the shift in target market, rather than just increasing costs of materials.
Comparing costs of construction with sale values helps to identify the extent to which land prices are an input into overall prices. A large proportion of sales value attributable to land, relative to the typology, may suggest that something is causing too much land to be ‘attached’ to the dwelling (such as minimum density controls), or may just reflect consumer preference.
Such a comparison is not easy, especially as there is no consistent classification system for the different types of dwelling units, while sales of houses, flats and apartments will cover plenty of older stock. So, for example, sale values of apartments will reflect the historical emphasis on small, cheaper units.
QV has data for the Auckland region on median sale values for houses, flats and apartments (new and existing combined) for the 3 months prior to November 2017, as follows.
Figure Six. Median sale price, 3 months to December 2017, Auckland Region
It is interesting to compare these sale prices with the costs of construction (as collected by the Building Permit data).
Figure Seven. Median sale price versus average build cost, 2017, Auckland Region
You would expect the costs of construction of an apartment to be close to the sale values, as the land component is very small. Likewise for a stand alone house, land will make up a much bigger proportion of the sale values, The above figures suggest a 50/50 split. The odd one out is the flats category. Here construction costs as recorded by Stats NZ are only about 1/3rd of the sale prices as recorded by QV, when logic would suggest something in between houses and apartments, more like construction costs being about 60% of sale values.
It may be that it is not possible to compare Stats NZ building permit data with the QV data on sales values. The two sets may not be an ‘apple for apple’ comparison, especially for the flats/townhouse component.
Nevertheless, the figures suggest that the sale value of town houses and flats may be ‘above the odds’ and my suspicion is that the sale value of flats has been dragged up by the value of stand alone houses, as well as past density controls attaching ‘too’ much land to this type of dwelling. Certainly on a per square metre of floor space basis, the sales value of a flat is well ahead of the other two types of dwellings.
Figure Eight: Median sale price based on per square metre of new floorspace
The sale values of apartments will reflect current stock, and in reality sale values of new apartments are closer to $10,000 per square metre. It is likely that over time as the market shifts from investors to owner occupiers, median sale values will increase.
The summary is that to help with affordability, we need more townhouses, flats and units, and the sale values of those units should better reflect their lower land component, that is implied at least, by this type of housing and their smaller floor area than stand alone houses. The above figures suggest a degree of ‘excess profit’ for flats and townhouses and hopefully this will spur developers and builders to focus on this market and over time see sale prices come closer to construction and land costs.
Where have these types of units been most commonly built?
The following bar graph and map shows the percentage of all residential consents that were for townhouses, flats and units, by Ward, for the 12 months to November 2017.
Figure Nine: Flats as percentage of residential building consents, by Ward for Auckland Region, 2017
The following maps the percentage by Ward.
Figure Ten: Flats as percentage of residential building consents, by Ward for Auckland Region, 2017
The pattern is of a higher percentage to the north and south of the region, towards the edges of the urban area, with a weighting to the south. The west does not have a strong emphasis on this type of housing. The central Isthmus has very few townhouses, flats and units consented (apartments are likely to be more important).
In terms of absolute numbers, Albany Ward is the winner by a large margin. Why so many in this ward? There are a number of large greenfields development areas in this Ward (ie Hobsonville and Albany Basin) so maybe it represents the extent of opportunities available.
Figure 11. Number of building consents for flats and townhouses, Auckland Region, 2017
The data suggests that the inner Isthmus needs to concentrate on apartments. Beyond that inner core to the region, there needs to be a ring of zoning that facilities flats, units and townhouses. The AUP’s Mixed Housing Suburban and Urban zones attempt to provide this type of opportunity, but it may be that there needs to be more of the urban category and less of the suburban category, especially closer into the core, and in the eastern and northern coastal fringes of the city.
