Dwelling demand overstated?
Latest Census results show we may need 69,000 fewer homes nationally than expected due to previous 2018 population estimates that have turned out to be bullish. This has some impacts on the balance between residential demand and supply looking forward.
A selection of the Census 2018 data was released recently showing population growth of 11% (2% p.a.) nationally between the two censuses, up from 4.24 million people in 2013 to 4.70 million people in 2018.
While an increase of around 457,500 people is a solid result, Statistics NZ’s June 2018 provisional population estimates predicted the increase would be 643,500 people, around 186,000 people more.
The higher estimated growth in numbers some may have used in the absence of Census results, very simply indicated an additional 238,000 homes were needed to house our new residents at the average household size of 2.7 people per home (2018 average yet to be released). However, the new Census data suggests this shortfall may be too high.
Resident population growth between the Census 2013 and Census 2018 indicates the requirement for 169,000 homes, approximately 69,000 fewer homes.
Using residential building consents as a proxy for supply (which doesn’t necessarily represent what is delivered or take into consideration the reduction in stock due to the demolition of existing premises), around 120,000 consents were issued in the five years to June 2018.
Therefore, simplistically, the potential shortfall of homes for the rise in resident population between 2013 and 2018 of around 118,000 homes under the 2018 population estimates, is only 49,000 under the new Census 2018 results. A shortfall remains.
Looking at the same information for the Auckland region, the 2018 population estimates overstated the Census 2018 total by 124,000 people with growth of 156,000 people instead of 280,000 people. At an average household size of 2.9 people in Auckland, this reduces the demand for additional homes from 97,000 to 54,000 between 2013 and 2018.