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Consents for new house building jump 27% in November year-on-year led by Christchurch and Otago says StatisticsNZ; Auckland languishes

Posted in News Updated

The number of new houses consented nationally rose again in November 2012, continuing the trend of the last 20 months, Statistics New Zealand said today.

"Since the latest low point in March 2011, we have seen continuous steady growth in the trend for the number of new houses consented," spokesperson Blair Cardno said. “The trend for new houses, including apartments, has climbed 45 percent over the 20 months to November 2012.”

"Excluding apartments, the trend for new houses is up by 41 percent since March 2011," he said.

Housing consent numbers for November 2012, compared with November 2011, were:

1,658 new houses, including apartments (up 20 percent)
1,619 new houses, excluding apartments (up 27 percent)
39 new apartments (down from 109).

Canterbury led the increase in the number of new houses in November 2012, up 171 from a year ago. Earthquake-related building consents in Canterbury totalled $59 million in November 2012.

The region with the second-largest increase in the number of new houses consented was Otago, up 49.

Auckland recorded 432 consents, its lowest in three months and just 2 more than the same month a year ago. Auckland is in the grip of a major housing shortgage with prices rising fast and new listing of existing properties coming on to the market at decade lows.

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The seasonally adjusted number of new non-apartment houses increased 4.6 percent in November 2012. Including apartments, the seasonally adjusted number decreased 5.4 percent. Apartment numbers can vary a lot from month to month.

The value of all building consents in November 2012 was $1,053 million, up 15 percent compared with November 2011.

Comment on the implications of this data from Christina Leung, and economist at ASB:

While dwelling consent issuance eased in November, this was driven by a decline in consent issuance in the volatile apartment component. Looking beyond the volatility, the underlying trend remains one of a recovery in house-building demand, underpinned by rebuilding in Canterbury. However, there are signs the recovery in house-building demand in Auckland is slowing. The low level of new housing supply means the Auckland housing market is likely to remain very tight over 2013.

The strength in the housing market presents a dilemma for the RBNZ. Signs of slowing momentum in the wider NZ economy mean the RBNZ will be unlikely to want to use higher interest rates to lean against the housing market. The RBNZ has indicated a preparedness to use macro-prudential tools such as Loan to Value Ratios, with the potential for these tools to be used later this year if the disconnect grows between housing credit growth and the wider economy. We expect the RBNZ will hold off raising the OCR until December this year.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

38 Comments

432 consents for Auckland.

432 consents for Auckland. Absolute disaster.

If you own property in Auckland do not sell - hold tight.

Also - How many consents actually get built I wonder?

 

Cool... my parents are

Cool... my parents are selling their central auckland home, I can see them rubbing their hands..

Stats NZ publishes a series

Stats NZ publishes a series called 'Building Work Put In Place', which gives you a quarterly time series at the national level - so it can be used as a ready reckoner I guess.

The latest data is for the September quarter and shows $1.277 billion of new dwellings 'put in place', which at, say $1,800 per sqm = 681,667 sqm or 3,029 houses at an average of 225 sqm per dwelling  - or roughly 12,000 per annum - very ball park numbers but you get the idea...

Note that there will also be a lag between the consent being issued and the work being done - could be up to 6 months or longer but building is usually pretty prompt after the consent is issued....

Compare that to the consent numbers and you would get some directional idea of the % of consents that are completed - I would expect quite a high % generally.

 

Auckland house prices are now

Auckland house prices are now such a joke ..... I now just want to see just how high they can go !! ...it just ridiculous and the amount of overseas people I talk to,  just fall out of their chairs when I tell them.

Who is hoodwinking who ? ? ?  I know ..... and you do too.

Some interesting comments

Some interesting comments here on a forum for migrants to NZ:

Hi fellow migrants to New Zealand. We moved here 3 years ago from the USA. We saw how horrifying the real estate downturn has been to our fellow Americans. Unfortunately, we're shocked at how oblivious our fellow Kiwis are about the devastating effects of falling house prices. Do your own research and make up your own minds, but if you're coming from abroad to settle here in New Zealand, and you're arriving with equity in your pocket, be VERY cautious about sinking it into another home in New Zealand. Prices are precariously "toppy". There's definitely a lot of the hallmarks of a serious downturn coming. It has already hit Australia. it's hit most spots in New Zealand too, but Auckland seems to be a bubble all its own.

Seems that there are those who have seen a bubble pop first-hand and then the locals saying "but this time it's different"

 

If the migrant read this

If the migrant read this article they would understand 1 core reason why Auckland is in 'a bubble all its own.'

This reason is unique - does it apply to any other country that has had a major housing crash? no.

In addition - Auckland did actually have a brief dip in activity and prices - just not a major correction.

 

The poster forgot to mention

The poster forgot to mention CHCH earthquake, insurance payouts that maight be a contributing factor for Auckland housing boom

The UK is undersupplied by 3

The UK is undersupplied by 3 million houses. The prices there have dropped 20% in real terms from peak (mostly inflated away).

Of course all that and

Of course all that and leakers, record low rates etc combine to create a perfect storm in Auckland.

What's Boomier than a

What's Boomier than a Boom?

We need a new word now.

BOOM BOOM

BOOM BOOM

BOOSHUKA?

BOOSHUKA?

a KABOOM! (if onomatopoeia is

a KABOOM! (if onomatopoeia is allowed)...

When the invisible hand of

When the invisible hand of Government caresses the invisible hand of Mr Market.

Any one policy on it's own is not a ball-breaker, but
Aggregated together they collectively guide and direct and influence house prices

TPA - you must exclude housing and land costs from your considerations
RBNZ OCR - targets inflation excluding 1 above
Open Door Immigration Policy - bring your untaxed money - we'll help you launder it and hide it
Open Door Policy on land and property ownership - no restriction on acquisition by non-residents
ANTI money laundering controls - missing in action for 10 years - get in now before they start
ANTI money laundering controls - come into effect later this year with 2 year implementation period
Local Government Planning restrictive controls
Local Government Consent costs and other Imposts

For non-resident owners of property, any capital gain is non-taxable
If purchasing a property for investment purposes and it is rented out, then any rents received will be non-taxable (Govt Policy)
Government will most likely be assisting the tennants with rent assistance to pay your rent, but you wont be taxed on it. (Govt Policy)
Because you wont be paying ANY tax, your expected ROI will enable you pay higher acquisition prices than tax-paying locals.

So non residents pay no tax

So non residents pay no tax at all not even on rental income?? That's completely nuts, the exact opposite of what nearly all other nations do.

I wish some of you good folk on here were in politics to point out this madness!

Check the IRD web-site. There

Check the IRD web-site. There is a short prescriptive list of payments to non-residents that are subject to non-resident-withholding-tax .. Interest, Dividends, and Royalties. Payments such as Management Fees (Starbucks, MacDonalds, Facebook, Google) are excluded, and thus do not incur non-resident witholding-tax, and, funnily enough, rents aren't included either.

Facts please: If you have

Facts please:

If you have property in New Zealand that you have rented out.

Even if you have determined that you are no longer a resident for New Zealand tax purposes, you will still be required to pay tax on any income that you derive that has a New Zealand source. This will include rental income that you receive from renting out a New Zealand property.

 

Interested in this one. 

Interested in this one.  Because I hear it's happening.  "It's said."

1.  One lives in Hong Kong

2.  Your residential properties are owned by a Singapore registered company

3.  Your New Zealand operation makes no profit because it remits various charges back to this Singapore owner for services.

4.   Singapore has special low tax rates on overseas operations / income.

Outcome - little tax paid and non to New Zealand.

Can this be true and is it really happening  ?

 

Regretably TRUE The precedent

Regretably TRUE

The precedent has been established by Starbucks and other US based operations. While they (may) have local domestic operations (filing NZ tax returns), they can "shift" their profits to other lower-taxing jurisdictions by way of "management fees" leaving the local operation in a break-even-state, or loss, or minimal profit. The same can be achieved by a non-resident property owning outfit receiving rentals (MacDonalds), and then "shifting" the net-rental-income to another jurisdiction (Cayman Islands) by way of "management fees" which are NOT subject to non-resident withholding-taxes. Clearly spelt out in the IRD documentation dealing with non-resident withholding-taxes. Would like to see the IRD trying to challenge that. They're snookered. Their rules.

This is tantamount to an "instruction-manual" on the web on how to build an IED. unfortunately.

Worth noting the

Worth noting the following

When there is an exploitable loophole it will be exploited.
The big-boys pay big-bucks to tax-lawyers to find loopholes
When the big-boys find one, it's not long before the minnows find out and follow.
Starbucks have been doing it for 15 years
It was only raised and publicised last year in the UK
It has never been raised as an issue here in New Zealand
Can bet both the big-boys and the minnows have been going at it for that long
NZ authorities have been MIA

Mr Speckles will know all about it. Ask him.

So coming from China you get

So coming from China you get a tax break in NZ - that the NZer does not.   If he/she owns the same portfolio of ten residential houses around say Valley Road in Mt Eden the Kiwi investor does not get the same break.  Thats scandalous as well as incompetent.
And our media miss the story while happily getting into a tizz about Google and Starbucks and delight in using terms such as 'dutch sandwich'   -thats the first ridiculous thing they do.
The second ridiculous thing is they then give space to Gareth Morgan and company for bashing Kiwi Investors for existing.
Theres a big story here.   lets hear about it more.
 
 
 
 

Capital always floods into a

Capital always floods into a sector/activity that makes the largest return on the capital using the least effort and bearing the smallest risk.

It happens to be that in NZ buying and selling land is currently a sector with the above attribute.

Then, questions are for policy makers. When would you step in this mud given there is already a market faliure brewing if not maturing? The invisible hand stops working in this situation.

Wanna bet? The precedent has

Wanna bet?

The precedent has already been established in the form of an outfit called Crown Asset Management Ltd

If and when there is a collapse of the market and many thousands of mortgagees go under water the banks will be directed not to foreclose but transfer their distressed holdings to that Government Owned "crown" entity called Crown Asset Management Ltd

Are we going to hear the

Are we going to hear the expression -- Bail out, again?

Gosh!

More like an assets for milk

More like an assets for milk powder sales swap with this juggernaut acting as intermediary. I am sure it would suit the suits of both nations.

Don't forget a highly

Don't forget a highly monopolistic building material supply market.  The totaly rigged housing market is practically begging the material suppliers to up their prices to match the second hand house prices.  The corollary is that if the building industry was not also rigged then the rising used house prices would stimulate a massive move of people to build new houses.  For all the problems in the USA, when they over stimulated house buying, at least their market worked correctly and delivered a whole bunch of new houses when prices rose.  The matter did at least resolve it's self logically according to normal market rules; demand was satisfied and prices returned to compedative market levels.  They will be better off in the long run for allowing the market to function correctly.  In the case of New Zealand's tantric, contrived dance with a property bubble; well we just seem to be economically throttling our selves to death.  One day it will all blow up or our ecconomy will just fade away and die a slow death.  We seem to be on the latter path.

It's time for another

It's time for another 'working group'...to waste tax payer dosh writing the spin to whitewash over the awful truth...that building a new house in chch involves being ripped off on every cost front possible.. plus gst.

Only fools and gamblers will sign up to a mortgage, just to be able to pay the gst and thieving charges. While the rest of the known world slides into the 'new normal' where property values have crash landed for good, here in Noddyland we can sit back and watch our very own insane bubble spread from jaffa land.

And when the music stops....who will be left without a chair to sit on!

And now for a leap tooo

And now for a leap tooo far...by the Herald...

"Just over 70 per cent of the 500 respondents in the Herald-DigiPoll survey approved of Labour's promise to enter the housing market to build 100,000 low-cost homes over the next 10 years".
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10858231

Why didn't the Herald poll ask..."Would you vote for a party that promised to use your taxes and borrowed money to enter the housing market to build 100,000 low cost homes over the next 10 years?"

House prices in the U.S. are

House prices in the U.S. are rising. They may not get bubbly anytime soon, but given time they will rise considerably. They have lots of room on the upside, so to speak.

Northern Europe and Australasia are already in the midst of an upswing. They will be rising in the foreseable future.

Central Banksters of the world are hell-bent on re-inflating the housing market, and given that most banks' assets are mortages on real estate, and that consumers' contribution to GDP is roughly two thirds in the OECD, without a rising real estate market the growth mantra comes to a halt, and the banksters loose their shirt...? It's not gonna happen!

Good times are here!

HGW

Just got back to Adelaide

Just got back to Adelaide after a couple of weeks in Auckland / Melbourne.

Auckland was lovely. Looked really good, was impressed with the new Britomart development and Westhaven. Auckland's weather is by far its best in January / Feb.

It was lovely to catch up with friends and family.

Now for the negatives.

Met an old neighbour who said the house we used to rent was bought by a Hong Kong investor for 800K. The property is returning a 4% yield. Total speculation. The owner also owns 8 other properties in Auckland.

Met lots of old friends who are really struggling in Auckland's weak economy. Everyone seemed so stressed out.

Met an old family friend who is a rich lister and a National party stalwart. Thinks Key and co are hopeless.

Conversations and magazines were full of housing stories. Boring!!!!!!

Conclusion - Auckland is a lovely place if you are wealthy or bought into housing a long time ago. For most other people the city is one big struggle street.

Auckland faces two paths. Either it will continue on its current trajectory, becoming more and more expensive, and increasingly becoming the hang out for retired kiwis, wealthy migrants, or poor young kiwi rent / mortgage slaves, or its property market and economy will crash and gradually over time there will some sort of gradual reversion to balance and normality.

There is a third path, which could be forged if only the country and the city had any policy brains. That is facilitate a prolonged govt house building programme as advocated by Labour, complemented by a radical reshaping of the planning rules to allow for affordable new infill and greenfield development.

 

You forgot to mention a major

You forgot to mention a major positive: Auckland does not have bush fires unlike Adelaide :)

Adelaide is not built on a

Adelaide is not built on a volcanic field like Auckland. :)

That's true, you win again :)

That's true, you win again :)

MIA - it's a matter of

MIA - it's a matter of perspective. You need to define what Auckland is to you. It isn't just property. Although on the basis of the property game it must be the place to be.

In the 1980's Auckland had a deficit of recreational space (excluding the coastline and aquatic sports) when the population was a lot less than what it is today. Some of the most valuable inner recreational areas have been cannibalised and sold off for property development. The city fathers have reduced not increased one of the most essential ingredients of what "made" Auckland a desirable place to live. If you have been following recent posts have a look at the comments on how you can't even get to "Long Bay Regional Park" for a day at the beach. That is happening now. Is that what you want?

Property players probably think Auckland is wonderful.
Your HK real-estate investor probably thinks it is fantastic.

It all depends on your perspective.

If one follows your third path that will not get any better
There is a third path, which could be forged if only the country and the city had any policy brains. That is facilitate a prolonged govt house building programme as advocated by Labour, complemented by a radical reshaping of the planning rules to allow for affordable new infill and greenfield development.

From the perspective of an older Aucklander who grew up there, Auckland is killing itself from the inside out. It's slowly eating itself to death.

From the perspective of an

From the perspective of an older Aucklander who grew up there, Auckland is killing itself from the inside out. It's slowly eating itself to death.

 

Only too true.

Well if the city does not

Well if the city does not build it cannot continue to grow as projected. Actually that would be a good thing for NZ.

Only if big business is

Only if big business is incentivised to setup elsewhere and the higher paid jobs are moved to other centres. The longer we rely on one big cities for growth, the more the problems will be compounded.

Where is the government on this? Why are there no incentives to get businesses into a rebuilt Christchurch or other popular metropolitan centres like Tauranga? The lower house prices and better job prospects would allow our highly-educated youngsters to live and work in the own country.

After reading most of the

After reading most of the comments on this site regarding the property market, especially in Auckland, I have come to the conclusion that there are two markets in New Zealand.  One in Auckland that according to the experts will keep growing, and the rest of New Zealand that according to QV is slipping backwards. 

So like some New Zealanders who move to Oz, do the rest of the New Zealand move to Auckland if they want to participate in this glowing real estate market or do we just stay put in our little towns south of the Bombay Hills and stagnate. 

There also must be two distinct economies in New Zealand, one in Auckland  for all those people in Auckland to be able to afford the houses up there. 

This morning I am sitting in my dining room looking out at the other economy of New Zealand, the farm opposite our house is feeding me.  I think I'll stay where I am.  At least I won't go hungry.