Christchurch Housing Accord Monitoring Report

For quarter ending December 2014

Executive Summary

This report provides an overview of the Christchurch housing market and an update on priority Accord actions.

Highlights

The housing market

Since mid-2014 Christchurch has been experiencing a strong upswing in residential development. Building consents, construction starts and the issuing of Code Compliance Certificates have significantly increased. In total, almost 9,300 building consents have been issued in Christchurch city since the earthquakes. This is fast approaching the estimated 10,500 dwellings lost in Christchurch city. Should this level of activity continue the housing shortfall across Greater Christchurch (which includes meeting the demand generated by population growth since the earthquakes) will be resolved by late 2017.

The rental market continues to show early signs of recovery, with active bonds increasing since March 2014. Despite this, the supply of rental less than $400 per week has not risen. While house price increases have slowed, the average Christchurch house price remains above Wellington’s average house price, counter to pre-earthquake trends.

Accord developments

Negotiations have continued between Council and the Government to enable development on the Awatea, Welles and Colombo Street sites (the latter two are Council sites). A resource consent application was lodged for the Awatea development in December.

Community Housing Provider establishment The Government confirmed to Council that only new tenants referred to the proposed Community Housing Provider by the Ministry of Social Development will be eligible for an Income Related Rent Subsidy (IRRS). The Council is to consider how best to proceed with establishing the Community Housing Provider.

Building consents

The Council regained accreditation on 18 December 2014. The timeframes to process consents have improved and the proportion of consents for more affordable housing (those with a value of less than $250,000) is increasing.

2

Progress against Key Targets: Target A Aim: Increase the immediate and long term supply of affordable homes in Christchurch

Target A: A 10% reduction in the number of households at the 40th percentile of household income paying more than

30% of household income on housing.

3

Source: Stats NZ’s annual Household Economic Survey undertaken in June and published in late November, next update

due November 2015.

As at June 2014 there were 18,900 households at the 40th percentile of Christchurch household income ($58,102) who

are paying more than 30% of their income in housing costs. This is an increase from 2013, but still lower than pre-

earthquake levels, most of the increase being from owner-occupiers in increased housing stress. The Accord’s target is

to reduce this number by 10% during the life of the Accord, a reduction to 17,010. Note: This data is to be treated with

some caution, as there can be high sample errors as Christchurch City is below the survey’s sample design area of

Canterbury. This can lead to high variations in results from year to year.

target - 17010 households

0

5,000

10,000

15,000

20,000

25,000

30,000

2009 2010 2011 2012 2013 2014

Number of Christchurch households at the 40th percentile above 30% housing stress

4

Progress against Key Targets: Target B Aim: Increase the immediate and long term supply of affordable homes in Christchurch

Target B: An increase in the proportion of new build consents with a consent value of less than $250,000 from 25% of consents as at September 2014.

4

The Council issued 247 consents with a value of less than $250,000 for the quarter ending December 2014 (26% of all

consents).

Note: The value of <$250,000 excludes land costs and is an estimation of the total value of all goods and services to be

supplied for the building work. One consent can be for a single dwelling or multiple dwellings in a multi-unit complex. This

data also includes replacement dwellings following a demolition. In the December 2014 quarter 98% of the consents were

for single dwellings.

0%

10%

20%

30%

40%

50%

60%

70%

80%

Jun

-11

Sep-1

1

De

c-11

Mar-1

2

Jun

-12

Sep-1

2

De

c-12

Mar-1

3

Jun

-13

Sep-1

3

De

c-13

Mar-1

4

Jun

-14

Sep-1

4

De

c-14

Proportion of residential building consents with a consent value <$250,00

Baseline

0

50

100

150

200

250

300

Jun

-11

Sep-1

1

De

c-11

Mar-1

2

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-12

Sep-1

2

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Mar-1

3

Jun

-13

Sep-1

3

De

c-13

Mar-1

4

Jun

-14

Sep-1

4

De

c-14

Number of residential building consents with a consent value <$250,000

5

Progress against Key Targets: Target C Aim: Support the sustainable provision of social housing in Christchurch

Target C: 700 (net) additional social housing units are added to the total social housing stock in

Christchurch from the date of signing of this Accord to the end of 2016.

5

Number of new build social housing units

In the quarter ending December 2014:

•HNZC completed 43 units

•Community providers completed 16 units

In the quarter ending March 2015 it is forecast:

•HNZC will complete 86 units

•Community providers will complete 7 units

• The Council will complete 8 units

The graph to the left illustrates the cumulative effect of

projected quarterly completions towards the target of

700. This target should be exceeded by the end of

2015, with 810 new units to be completed within the

2015 calendar unit.

Target 700 (net)

Priority Actions Action Description Progress Next steps

Increase the supply of

temporary and

affordable housing

Develop medium density affordable housing on Council land. Develop innovative mixed tenure housing on Government-owned land at Awatea site (Carrs Rd). Identify surplus Crown and Council land and buildings appropriate for residential development.

350 Colombo Street and 36 Welles Street: Working with preferred partner to finalise business case and design. Awatea: Development agreement signed, resource consent lodged.

Land: The Council provided MBIE with details of 17 potential sites.

Welles/Colombo: Construction commencing mid 2015 subject to consenting. Awatea: Construction expected to commence first quarter 2015 subject to consenting.

Land: Cabinet to consider Housing Accord Fund allocation process by April 2015.

Improve the supply and

quality of social housing

Establish a housing entity capable of meeting the registration requirements for a Community Housing Provider to redevelop Council owned social housing assets. Council to progressively capitalise the entity or entities with $50m of land and assets. Identify opportunities for CCC and HNZC to work together.

The Council decided preferred entity structure in December 2014.

The Council’s identification of $50 million will be included in its Long Term Plan (LTP) consultation document.

Minister for Social Housing advised the Council of the decision on IRRS for existing tenants of the new Community Housing Provider.

Council to consider how best to proceed with establishing the CHP given current Council tenants will not be eligible for IRRS.

Council to confirm process for capitalising the entity or entities with an injection of $50 million of land and other assets following the LTP finalisation in June 2015.

6

Priority Actions continued Action Description Progress Next steps

Remove regulatory

impediments to

residential

development

Monitor progress of housing related actions in the LURP and address issues impeding supply and affordability of residential development.

Monitor resource and building consenting processes to ensure that they are efficient and do not create any unnecessary delays to development.

The Meadowlands development is proceeding as an exemplar. On 27 November 2014, Council approved the proposed development at Riccarton racecourse as an exemplar in principle. The first of the Council’s two exemplar sites was released to partners in the week of 15 December 2014. The Council has extended the Central City Residential Rebate Scheme until 30 June 2016. Until 1 July 2015 the Council will waive development contributions for conversion of family flats to second residential units on site.

Both Council exemplars to be submitted to the exemplar panel in first quarter 2015. HNZC exemplars to be submitted to exemplar panel in first quarter 2015. Council to decide on whether to establish a one stop shop for planning and consenting or to adopt other options by end June 2015. From 1 July 2015 the Development Contributions Policy comes into effect which will enable better targeting of development contributions to areas where the Council needs to invest in to cater for growth. The policy will also provide a sliding scale of ‘discounted’ contributions for minor dwellings.

Encourage innovative

design and

manufacturing

processes

Use scale and scope of joint activities to encourage use of new technologies or manufacturing or construction techniques to reduce costs and improve productivity.

Use of prefabrication likely to be a key feature of Awatea, Welles and Colombo Street developments.

Ongoing discussions with preferred partners.

7

Land Supply: Greenfield sections

Indicator Current - November 2014

Previous - June 2014

Change

Potential Sections in greenfield priority areas (incl. land not zoned)

19,775 19,769 +6

Potential Sections within operative Living (residential) zones in LURP priority greenfield areas

10,553 10,519 +34

Sections consented or subject to application for subdivision in LURP greenfield areas

4,972 4,672 +300

Percentage of potential sections zoned Living in

LURP greenfield areas with subdivision consent or

subject to application for subdivision

47.1% 44.4% +2.7%

8

Source: Christchurch City Council. The next report is due May 2015 and will be included in the Accord’s June 2015 monitoring report.

Land supply: key developments

9

Key development resource consents granted in quarter ending December 2014:

Resource consents applied for key developments in quarter ending December 2014:

118 units in pre-application stage – Aranui and Riccarton (Housing New Zealand Corporation development)

56 units at 200 Awatea Rd, Halswell

Note: The average statutory processing time for resource consents granted was 10 working days. Of those developers who had

pre-application meetings with the Council, the time between these meetings and their lodging of an application ranged from 2

months to 1 year 2 months.

DWELLING TYPE NUMBER OF

DWELLINGS

ADDRESS LOCATION

Apartments 42 3 Beresford St, New

Brighton

10 km east of CBD

Units 45 64-74 Vanguard Drive 11 km west of CBD

Lots 42 685 Cashmere Rd 12 km south of CBD

TOTAL 129

10

Land Supply: Subdivisions Subdivision consents granted

Section 224 certificates issued*

10

In the quarter ending December 2014 99% of subdivision consents (121 consents) were processed within the statutory

timeframe, the same percentage as the December 2013 quarter (79 consents). The above data includes both residential

and commercial subdivision consents and certificates. CCC is reviewing its processes to separate out this information for inclusion in reports for Quarter 1 2015 onwards. (*Council acceptance of the assets constructed e.g. roads, water, wastewater).

0

20

40

60

80

100

120

140

20

11

Q2

20

11

Q3

20

11

Q4

20

12

Q1

20

12

Q2

20

12

Q3

20

12

Q4

20

13

Q1

20

13

Q2

20

13

Q3

20

13

Q4

20

14

Q1

20

14

Q2

20

14

Q3

20

14

Q4

Subdivision consents granted

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10

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60

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90

100

20

12 Q

4

20

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4

Section 224 Certificates Issued

Housing: Consents Issued

11

For the quarter ending December 2014, 1184

dwellings (houses and units/apartments) were

consented; 381 more than the 803 consented

in the December 2013 quarter.

Once demolitions are subtracted, less than half

the total consented (582) made a net addition

to the existing housing stock.

The difference between the two totals (602)

reflects the increasing number of post-quake

rebuilds that replace existing building stock.

0

200

400

600

800

1000

1200

1400

20

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20

14

.2

20

14

.4

Total Housing Consented

Gross Total Net Total

12

Housing Construction Construction Starts – first building inspection

Code Compliance Certificates

12

0

200

400

600

800

1000

1200

20

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20

14

.2

20

14

.4

Total Construction Starts

Gross Total Net Total

In the fourth quarter 2014, a total of 815 dwellings (houses and

units/apartments) reached their first inspection.

• This was an increase of 476 more than in the fourth quarter, 2013.

• Two-fifths (330) were net additions to the housing stock.

• The balance (485) was for replacement housing.

0

200

400

600

800

1000

1200

2004.2

2004.4

2005.2

2005.4

2006.2

2006.4

2007.2

2007.4

2008.2

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2009.4

2010.2

2010.4

2011.2

2011.4

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2012.4

2013.2

2013.4

2014.2

2014.4

Code Compliance Certificate

Gross Total Net Total

Construction was completed on a total of 652 dwellings (houses and

units/apartments) for the quarter ending December 2014.

• This was an increase of 272 more than in the fourth quarter 2013.

• More than half (383) were net additions to the housing stock.

• The remainder (269) was for replacement housing.

13

Housing Affordability House Prices Housing Affordability

13

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

2009 2010 2011 2012 2013 2014

Average House Value

National Auckland

Christchurch Wellington

0

10

20

30

40

50

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Housing Affordability Index

National

Auckland

Canterbury

Wellington

Source: Massey University

Note: Higher index values mean less-affordable housing

Christchurch City’s average house price at $469,700 is below the national average but above Wellington prices. Canterbury housing affordability has decreased since December 2013 and is less affordable than Wellington and

equivalent to the national level. In the December 2014 quarter, Canterbury’s affordability index declined by 5.8% from

the previous quarter.

Rental supply and demand

Rental Demand

Demand is expected to increase in the next two years from the rebuild workforce and ‘business

as usual’ household growth. This will be balanced by a decline in demand from displaced

households as EQC complete their repair programme.

On aggregate the rental market is expected to ease during 2015/2016 and head towards

equilibrium in 2017.

14

Rental Supply

Active bonds have increased since March 2014,

with 36,018 active bonds as at end December

2014.

This indicates that the residential repair

programme is releasing long-term rentals back to

the market. However active bonds continue to be

well below the long-term growth trend line.

20,000

25,000

30,000

35,000

40,000

45,000

De

c-9

9

De

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0

De

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De

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5

De

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6

De

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7

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8

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9

De

c-1

0

De

c-1

1

De

c-1

2

De

c-1

3

De

c-1

4

Total Active Bonds: Christchurch City

Chch City Active Bonds Trend since 1993Source: MBIE

Rental Affordability

15

$250

$300

$350

$400

$450

$500

Jan

-10

Ap

r-1

0

Jul-

10

Oct

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Jan

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Ap

r-1

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Jul-

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r-1

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Jul-

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Oct

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Jan

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Ap

r-1

3

Jul-

13

Oct

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Jan

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Ap

r-1

4

Jul-

14

Oct

-14

Average Rent by Region Private Bonds Lodged

Auckland Greater Wellington Christchurch City New Zealand

Source: MBIE

Affordability

As at December 2014, Christchurch

City rent has increased from pre-

earthquake levels by 38%, compared

with 21% for Auckland.

Average rent in Christchurch has

been stabilising since February 2014

Footnote: the average rent as at December

2014 appears to be a seasonal blip, as

rents in early 2015 have returned to previous levels.

Social Housing Demand

The Christchurch City Council wait list had 343

applicants as at end December 2014 (up from

330 at end September 2014), including

32 A-priority applicants. The Council houses

around 4 to 6 A priority applicants each week.

The MSD-administered Social Housing

Register had 504 applicants for Christchurch as

at end December 2014 (down from 542 at end

September 2014), including 279 A-priority

applicants.

The 810 new social housing units to be

constructed by the end of 2015 (as outlined

on page 5) will help address the demand as

shown on the Council wait list and the MSD

register.

Note: Some applicants will be recorded on both the MSD Register and the Council wait list.

16

0

100

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600

700

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g-14

Oct-1

4

Dec-1

4

Social Housing Waiting Lists Christchurch

MSD Register

MSD Register - Cat A

CCC wait list

CCC Waitlist - Cat A

17

Demand for Temporary Villages CETAS Applications Village Occupancy Rates

17

0

100

200

300

400

500

600

700

800

900

Oct-1

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No

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Jun

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g-14

Sep

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No

v-14

De

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CETAS Open Applications (Future Need, Matching, In Village)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sep

-13

Oct

-13

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

De

c-1

4

Village Occupancy Rates

Due to the completion of the bulk of under-cap repairs, the total number of households on the register for the CETAS villages

has passed its peak. However demand is expected to continue to be high due to the over-cap work which has a longer

displacement period. Village occupancy rates were at 81% at the end of December, lower than normal due to the holiday

period.