Tuesday, 21 April 2015

Empty houses?

Metro Mag ran a feature on empty houses in Auckland, pointing a finger at empty houses with overseas owners as a cause of Auckland's skyrocketing housing cost.
In Auckland, more than 33,000 houses were registered as unoccupied in the most recent data from 2013. A breakdown shows about a third had residents away. The remaining 22,152 properties are listed as empty.

Who owns them and why no one lives there is information that’s not readily apparent, although ask around and you’ll hear all sorts of theories – from land banking by foreign investors who see New Zealand as a bargain-priced bolt hole to families future-proofing their children’s education by buying a second house in a desirable school zone.

Whatever the real story, it’s not that the owners (or tenants) just happened to be out when the collectors knocked at the door. Census workers are given clear criteria on the various definitions of an “unoccupied” house and need evidence no one lives there (the appearance of the property, talking to neighbours) before it’s officially classified.
The rest of the article is pretty heavy on anecdote. Little of it made sense to me: why would you forgo rental earnings in a house you'd decided to buy as an investment or bolt-hole? Maybe legislation being too tenant-friendly could do it, but it seemed odd.

So I checked the figures. From Auckland Council's report on the 2013 census.
2.3 Very small increase in number of unoccupied dwellings 

There was almost no change in the number of unoccupied dwellings in Auckland between 2006 and 2013 – the number increased by only 30 to a total of 33,360 across the region. This was a significantly smaller increase than the previous inter-censal period, when the number of unoccupied dwellings had increased 3,744, or 12.7 per cent, and was also significantly smaller than other regions across New Zealand.

This could be a reflection of the housing shortage in Auckland at a time of economic slow-down and a contraction in the construction sector.

In 2013, the local board areas with the highest number of unoccupied dwellings were:

• Rodney - 4,185 unoccupied dwellings
• Waitematā – 3,696
• Hibiscus and Bays – 2,274
• Franklin – 2,055
• Orākei – 1,929

A third of unoccupied dwellings in Auckland (33.6%) were due to the residents being away, while two thirds (66.4%) were empty. The five local board areas with the highest proportions of empty dwellings were:

• Great Barrier – 87.4 per cent of unoccupied dwellings were empty (396 empty dwellings)
• Rodney - 80.6 per cent (3,375 empty dwellings)
• Waiheke – 73.4 per cent (1,323 empty dwellings)
• Ōtara-Papatoetoe – 73.0 per cent (615 empty dwellings)
• Franklin – 72.8 per cent (1,497 empty dwellings)
If the number of unoccupied houses increased by 30 from 2006 to 2013, the proportion of unoccupied houses would have dropped significantly. Further, if there are about 470,000 dwellings in Auckland and about 22,000 were unoccupied at the time of census, that's under 5%. That's not really inconsistent with houses being empty during sale or between tenancies, is it?

How can a decreasing proportion of empty-on-census-night houses be the cause of increasing housing costs in Auckland?

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