If achieved, 3,122 new apartments will be added to the city’s inventory making it only the third time since 2000 that more than 3,000 new apartments have been completed in a calendar year.
The development acceleration has been underpinned by the growing appeal of apartment living in the suburbs. This year 22 suburban apartment developments will make up 75% of the regional total, up from 19% in 2016.
Colliers International research associate director Ian Little says development intentions remain positive as illustrated by building consents which have reached a record 50,653 in the year to August. “The influence of multi-unit developments has continued to increase. On a national basis the total number of apartment and townhouse consents made up 49% of total consents. In Auckland the influence of multi-unit development is greater still accounting for 73% of consents. “
The development sector’s ability to maintain momentum is, however, facing increasing constraints, including the cost and availability of credit to both developers and buyers, rising building costs putting pressure on margins and the general softness of the overall housing market.
Little says as a result, it is likely that an increasing number of proposed development projects will be kept on the drawing board or, in some cases, abandoned. “Although, the pipeline for 2023 remains robust with just over 2,500 units under construction, it is likely the rate at which new projects are delivered will decline over the medium term.”
New apartments have continued to command premium values in comparison with that of older existing stock. The higher values reflect not only the appeal of new apartments but also the impact of rapidly increasing building costs. Analysis by Colliers research found the average asking price for new build apartments stood at $1,560,595 over the six-months to June, an increase of 29.8% on the June figure last year. Over the same time the median sales value of all Auckland apartments dropped by 5% to sit at $665,000.
Help for developers
To help developers who might have to might have to abandon projects due to the rising costs of materials and labour and a drop in house prices the Government has introduced the Build-ready Development Pathway.
For eligible build-ready developments, where construction hasn’t started, government assistance can take two possible forms:
- purchasing the developer’s land under a government land acquisition programme; or
- pre-purchasing or underwriting homes ‘off the plans’ to reduce risk for developers and their financiers
The government has committed $75 million of the $350 million Affordable Housing Fund for prepurchase commitments and underwrite agreements, to support consented developments where construction hasn’t started, and developers haven’t been able to secure enough presales to satisfy development finance.