Auckland real estate market is self-correcting
The North Shore real estate market is slowing down considerably. This doesn’t surprise me. During an election year Kiwis tend to put their hands in their pockets and keep their heads down. They’re biding their time, waiting to see if the status quo is maintained or if there’ll be an upset of the apple cart as with Brexit and Trump.
The Auckland real estate market became overheated last year. It’s now self-correcting downwards by three or four per cent to what it should be. I think that the market will flatline and then it will take off again.
Chinese buyers have had their finance cut off by the Chinese Government. End of story. Many of the Chinese-funded developments in the planning stage in Auckland won’t now go ahead, even if they already have resource consent. These developments were aimed at Chinese buyers in China. Many Chinese buyers purchased by financing out of China. They did this in Canada, the US, NZ and Australia. Now they are withdrawing for the short to medium term giving our Auckland property market a much-needed breather.
Chinese nationals were permitted to send out $50,000 per person per year from China to buy houses and cars. Not anymore. Many Chinese have been buying strongly in the Auckland market since around 2002 and now own multiple properties, leveraging each new one off the back of the previous purchase. They don’t sell the properties. Why would they, when they can make $50-70,000 in capital gain per residential property annually, with an even higher gain last year? This is good money by anyone’s measure.
A bigger question to my mind is whether the properties developed by Chinese have been an asset to Auckland or have created slums of the future, by bringing in low-standard materials, and by using unskilled labour. Wait until the Chinese-constructed dwellings start collapsing with plumbing and wiring connections that aren’t up to scratch. The steel mesh in concrete foundation slabs and driveways won’t last and nor will some of the rubbish steel beams and girders. New Zealanders are in for a harsh wake-up in the next decade or two. The Government is not stopping any of these products from coming into our harbours and our construction sites. Why not?
The charges being laid against companies like Steel and Tube for making misleading claims about what’s turned out to be low-grade steel are the tip of the iceberg. The Government has been too slow to wake up to the fact that poor-quality construction materials are flooding New Zealand by the containerloads from China.
Thanks to the poor planning of the Auckland Council and lack of leadership we’re creating not Auckland the most liveable city but the slums of the future. The leaky building fiasco (the Government must bear a good deal of responsibility for its flawed decision making over untreated timber), will seem a doddle in comparison.
Auckland is building potential slum after slum with inferior materials and workmanship. This is allowed by the Council under the Unitary Plan - why?.
Under the Plan, dwellings of 50-70 sq m are being consented with inadequate carparking. The minimum number of carparks required for 50 units is 25. There’s no outdoor living in these blocks. We’re mass producing small boxes for the Asian market. Therefore, putting aside land for parks and public spaces and offering a comprehensive and effective interconnected public transport system will become even more essential.
We’ve known about shoddy steel for years. And the Council has known about the shoddy building going on. What are they doing about it? We’ve supposedly got a tougher building code, but it seems to be applied only when a leaky building requires recladding.
We are building the biggest future slums in the modern world. It’s enough to make you weep. I may not be around to watch the train wreck in slow motion – but my kids and grandkids will!
Beware what you purchase!!