Co-living: Denying the Kiwi Dream or embracing the need for housing diversity?
From the frosty reception of the New Zealand public and media towards co-living, it’s almost as if the housing crisis that we face in Auckland and the inevitable impact on our children and future generations is happening in another city far away from our gaze
Co-living is a divisive term that seemingly leaves a bitter taste in the mouths of many New Zealanders as they perceive it to be a direct assault on the Kiwi Dream of raising a family, a dog, a cat, and a vege garden (among other things) on your own patch of dirt.
Regardless, I have been astounded at the adverse reaction from the media towards The Coh’s new co-living development in the heart of Auckland on Symonds Street.
For those unaware, The Coh is set to open in early July and will include 22 bedrooms with shared usage of living space that includes amenities like a kitchen, communal and work areas, a movie room, laundry facilities, rumpus room, and weekly cleaning.
Whether you love or hate the concept that has proven successful in other locations around the world, it never ceases to amaze me how closed off so many people are to innovative and practical housing solutions.
Standing back to take a birds-eye and impassive view of the comments from the public and inferences from the media, it is almost as if the housing crisis that we face in Auckland and the inevitable impact on our children and future generations of New Zealanders is happening in another City far away from our gaze.
From my industry experience as a long term residential investment specialist, I don’t think our wider population actually realise how practically serious our housing crisis really is in Auckland. It is crucial that all of us within the property industry and government committed to helping house our future generations recognise that this issue goes far beyond affordability.
JLL’s research shows that the fundamental problem with Auckland’s housing market is not actually the availability of housing for sale, but rather a serious bottleneck of pricing. Our housing stock just isn’t varied enough to cope with the demands of our changing population and the much welcomed move towards all forms of diversity, millennial preferences (albeit generalised) of experience over materialism, and an increasingly global world.
Housing may be considered expensive, yes, but what has exacerbated the problem is an abundance of detached houses and luxury apartments in Auckland offset by a paucity of mid-size accommodation and constrained price range.
To illustrate this, according to JLL’s research based off realestate.co.nz’s public listings across the whole of Auckland, roughly two thirds of asking prices sit between:
- One bed properties - $460,000 and $710,000
- Two bed properties - $480,000 and $960,000
- Three bed properties - $490,000 and $890,000
- Four bed properties - $760,000 and $1.2m
This high level analysis includes both houses and apartments and covers a wide range of different locations with different micro-markets. We therefore conclude that these are very narrow ranges for a city the size of Auckland.
My consistent message during the market review presentations I’ve given in 2019 so far is that, in the round, New Zealand has an awful lot going for it.
In an increasingly uncertain world with substantial growth in large scale investment funds taking a global investment view, New Zealand presents positively in terms of sustainable economic growth fueled by population growth and improving infrastructure.
Auckland has found itself on the global stage and we are starting to enjoy the economic and development benefits of being in the spotlight.
However, despite the positive fundamentals, we are not blessed with an abundance of resources, especially as our population continues to expand. As a country of only around 5 million people and more than 4,000 kilometres away from our nearest large scale economic partner in Australia, the wider population do not perhaps appreciate that every new development decision is on a knife’s edge.
Viability is tough with rising construction prices and land constraints forcing land prices up due to competition. The reality is that we can’t afford to get it wrong due to resource constraints so only the most logical developments tend to get built.
I will openly and unreservedly admit that The Coh’s product is not at all for me. At my age and stage of life, I really don’t want to live there. And why? Well, I’m 44 years old and my wife and I have four young children who need space to run around and grow up in, and we’ve both been there, done that and enjoyed co-living while at University (now many years ago!).
We are now at a stage in life where we feel that home ownership suits our circumstances more than renting. Yet housing in New Zealand is not about us and what we think. It should be about providing all New Zealanders with housing options to suit them at different stages of their housing life.
Renting is not a second class tenure and our rental sector is as important, if not more important, than our home ownership sector from a practical perspective. Access to more quality rental housing will allow our younger generations to benefit from flexibility and diversity of opportunity in a rapidly changing world.
To solve our housing crisis we need a mixed tenure approach with a wide variety of solutions catering for a wide variety of people. Thinking outside of the box is not an option but a necessity.