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Hamish Firth: Mt Hobson Group urban planning expert on the decline in Auckland apartment sales · Best of Business

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  Speaker 2: So story caught my attention. On Friday. It was reported
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  Speaker 2: the New Zealand Herald that apartment sales are so dire
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  Speaker 2: in Auckland. One developer is having to rent, not sell,
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  Speaker 2: seventy seven units in a brand new apartment block. Yet
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  Speaker 2: despite low sales and lack of demand, the government is
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  Speaker 2: changing laws to allow for more apartments. So why are
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  Speaker 2: we planning to build housing that no one is currently buying?
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  Speaker 2: Is this just we actually?
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  Speaker 3: You know?
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  Speaker 2: Do we have a long term plan in place? Every
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  Speaker 2: once would be very exciting. Mount Hobson Group urban planning
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  Speaker 2: expert Hamish Firth is with me now, Good morning Hamish.
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  Speaker 3: Good morning Francesca.
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  Speaker 2: So we're told that building upwards and intensification is a future,
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  Speaker 2: So why are apartments not selling?
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  Speaker 3: I think we've got to look at the market in general.
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  Speaker 3: Perhaps during the COVID period prices may have got out
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  Speaker 3: of control. I think since then, Auckland is back twenty
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  Speaker 3: four to twenty five percent in value, and Wellington thirty
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  Speaker 3: and I think the country seventeen. So I think what
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  Speaker 3: We've had to do is take a great, big, deep
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  Speaker 3: breath and pause and reflect. The development you're talking about
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  Speaker 3: is by a developer called Ockham. They are experienced and reputable.
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  Speaker 3: They build buildings in places people want to live, and
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  Speaker 3: they create apartments and spaces that people want to live in.
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  Speaker 3: I suspect what's happened is those you know, that project
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  Speaker 3: now finished is probably four or five years in the
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  Speaker 3: making from concept to the reality, and I think what's
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  Speaker 3: happened over that time is the prices they needed to
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  Speaker 3: get have fallen somewhat, so there is a disparity between
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  Speaker 3: what they are prepared to sell them for and what
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  Speaker 3: the market will pay for them.
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  Speaker 2: Oh, I gotcha. So there's two things at play here.
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  Speaker 2: A first home bar might be going, oh, house prices
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  Speaker 2: have dropped, I can afford a home on that little
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  Speaker 2: section that I want. And then you've also got the
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  Speaker 2: develops going, We're not quite going to get the money
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  Speaker 2: that we want for it here. So a couple of
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  Speaker 2: things potentially on the happening here.
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  Speaker 3: Yeah, And the other thing, I think very pleased that
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  Speaker 3: the building's finished and then occupy and can be occupied
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  Speaker 3: because you'll look downtown Custom Street, there's a forty story
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  Speaker 3: building that has been more than just over half finished
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  Speaker 3: for a year and that almost abandoned. We've got other
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  Speaker 3: projects around that have sort of not also been finished,
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  Speaker 3: and I'm just glad that this project's finished. Whether you're
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  Speaker 3: a renter or an owner, there's somewhere that someone can
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  Speaker 3: put a roof over their head and call home for
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  Speaker 3: a period of time. Yeah.
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  Speaker 2: Absolutely, just is it just not the key we way?
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  Speaker 2: Are we a bit slow to adapt to living in apartments?
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  Speaker 3: I suppose we've always had the benefit of large open
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  Speaker 3: spaces where we've rolled suburbs out over time. You know,
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  Speaker 3: back in the nineteen fifties, Glenn Dowie was a farm.
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  Speaker 3: It's now suburbia. So you know, you've got a lot
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  Speaker 3: of these places which we've sort of grown into the
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  Speaker 3: north shore of Auckland as a classic example. As we
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  Speaker 3: rolled through all of the but I think what you'll
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  Speaker 3: find scattered amongst all of it are a series of
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  Speaker 3: apartment buildings, usually built on ridges or in places where
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  Speaker 3: people can take advantage of the view. And they also
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  Speaker 3: in our CBD we have a number of apartment buildings
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  Speaker 3: and they suit people at a certain age and stage,
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  Speaker 3: so perhaps older people or downsizes, perhaps students coming through,
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  Speaker 3: or perhaps maybe young families with lesser amounts of kids.
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  Speaker 3: So I think that it's really good that we've got
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  Speaker 3: that variety of housing forms standalone houses, terraces, apartments. So yeah,
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  Speaker 3: there's a place and a need for that apartment style
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  Speaker 3: of living.
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  Speaker 2: So right now it's a reflection of the market. But
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  Speaker 2: actually this is what we need to be doing, isn't
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  Speaker 2: it that you know, we're talking about it potentially, you know,
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  Speaker 2: leeding a couple million more homes in Auckland by twenty
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  Speaker 2: fifty and the intensification is the way to go.
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  Speaker 3: Well, we've built a five billion plus CRL, you know,
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  Speaker 3: central rail Loop, and I think it's really important that
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  Speaker 3: we intensify around those rail stations. I remember coming in
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  Speaker 3: from London to garden Or on the train and I
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  Speaker 3: stayed at the aptly named Terminus Hotel eight nine ten
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  Speaker 3: story building right outside the train station. A logical place
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  Speaker 3: to put high rise developments. So I think that the
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  Speaker 3: council perhaps a bit late to the game because these
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  Speaker 3: plans should have been done when the CRL started. But
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  Speaker 3: they've got thoughts that we're going to provide capacity. Let's
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  Speaker 3: not supply. That's an enablement of development potential around train stations,
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  Speaker 3: and then it's also freeing up capacity in the rest
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  Speaker 3: of Auckland for more housing, perhaps in more of the
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  Speaker 3: traditional form.
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  Speaker 2: Okay, look, if nothing else, it's great that there's more
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  Speaker 2: rentals available. I suppose if you're building to rent, that's
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  Speaker 2: a pretty busy part of the market at the moment.
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  Speaker 2: So at least these properties are lessening the demand for
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  Speaker 2: rentals in Auckland.
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  Speaker 3: I'm a great believer that we need to commodify household
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  Speaker 3: We need to bring it back to a level where
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  Speaker 3: it's affordable for people to get into the market at
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  Speaker 3: a first home level and then the second home level
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  Speaker 3: or the next step up. So the more we can
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  Speaker 3: take away density or land supply, whether that's up or
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  Speaker 3: out out of the equation, the more we can suppress
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  Speaker 3: that sort of supply demand curve where prices run away
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  Speaker 3: because there's not enough land to develop on. So look,
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  Speaker 3: it'll be interesting because we've got infrastructure problems and the
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  Speaker 3: rest of it. But if we've got the right zoning
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  Speaker 3: in place, then we've enabled development to happen. Not now,
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  Speaker 3: but we're planning well for the future.
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  Speaker 2: Oh well, that's good to hear. I'm glad. I'm glad
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  Speaker 2: we are because we always need to be a little
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  Speaker 2: bit behind the april, don't we. Amish Hey, thank you
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  Speaker 2: so much for your time. That was Mount Hobson Group
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  Speaker 2: urban planning expert Hamish Firth.
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