The residential building boom looks like it's starting to wane, with the number of new dwellings being consented falling below where it was a year earlier, for three consecutive months.
The latest figures from Statistics NZ show 3457 new dwellings were consented in December last year, down 16.3% compared to December 2021.
The December 2022 figure was also 7.8% lower than December 2020 figure. And it was the third consecutive month that the number of new dwellings was lower than the same month a year earlier.
The quarterly figures also suggest the number of new homes being consented may be at the start of a longer term decline.
They show that when compared to the same quarter a year earlier, the number of new dwelling consents being issued continued to increase significantly up until the first quarter of last year, then flattened off in the second and third quarters before declining in the fourth quarter.
The decline in dwelling consents is most apparent in the Auckland region, where 4852 new dwellings were consented in the fourth quarter of 2022.
That was down 12.4% compared to the fourth quarter of 2021, and was the first time dwelling consents in the region had been below 5000 since the first quarter of 2021.
Fourth quarter dwelling consents were also down significantly compared to a year earlier in Waikato, Bay of Plenty and Otago, although they remained at elevated levels in the Wellington Region and Canterbury.
A downturn in the number of new dwellings being built could have serious economic consequences because the residential construction industry is both a major employer and contributor towards Gross Domestic Product.
The estimated total value of building work (excluding land) for the new residential consents issued in the fourth quarter of 2022 was $4.82 billion, down by $219 million year-on-year.
That's a significant decline, given that the construction industry is facing major inflationary pressures.
However it may take several months for a reduction in building work to be felt, because it typically takes around two years from the time a dwelling is consented until it is completed and ready for occupation.
In the meantime, the building industry in Auckland and other parts of the country severely affected by recent flooding could get a boost as damaged homes are repaired or rebuilt.
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42 Comments
This just shows the building sector has nailed their own feet with the greed.
The housing sector building companies and RE agents are a kabal who knows the black hole sized holes in the very lightly regulated industry and exploit then to increase the prices.
But it's time now to realize that if while building you nail your own feet to the wood and when the wood is too heavy, you get stuck and can't move. Might have to cut yourself out but it will not be easy and without bleeding.
This just shows the building sector has nailed their own feet with the greed.
It doesn't, but cool rant bro.
HouseMouse warned us about this when no one else was...
It was written...
The amount of new builds where I am is amazing..nearly 150 just sitting there, at least 3-4 new builds a day coming onto the market, but only a few buyers, surely it's only a matter of time before they have to slash the prices for cashflow.
Agree with your comment on cash flow - once the costs from the Christmas holiday are due for payment, about now, it becomes somewhat problematic to pay with no income...at least the trades enjoyed Christmas on the new boat, towed by the new Ram.
It seemed for a while like every man and his dog (well at least every privately/boys'-only schooled man) was going into the property development business armed with a ticked-up Ford Ranger Wildtrak, RM Williams boots and a small investment from the bank of mum and dad.
I wish I'd saved a screen shot now, but the other day I actually saw an ad on Facebook from a car dealer (might have been one of the Ford dealerships in Chch but can't remember) basically saying "if you're over-extended on your ute bring it in and we will give you a good price.
Hopefully we may see some adjustment in builders hourly rate downward.
In 1993 master builders charged $25 per hour. Adjusted for inflation it should be $49 per hour. Anyone know the current rate?
$70 ish if not more on my last one 12 months ago, Wellington.
Yeah 65-75.
It's not the hourly rate thats the issue, it's how much longer building takes in 2023 compared to 1993. That trend is only going to continue, not reverse.
The quality of workmanship has also taken a beating with this gold rush in construction. Can't expect good bang for your buck in a market that is running well-overcapacity.
Goes back well before then. There's about a 20 year hole of experienced tradespeople, so the workforce is skewed towards older dudes who have a foot half out the door, and the young guys they've sort of trained.
It's also not much of a gold rush. Anyone doing work to a price has barely treaded water due to supply delays stretching timeframes, and those that twigged have been running on labour+materials, also not a profitable way to do work.
I'm still a firm believer building materials also have some fat to be shed. We've had decades of ever cheapening debt, there's no way Winstone Wallboards and Carter Holt Harvey etc have decided "oh well let's just keep running with cost + x%" *middle finger shareholders*. No, they're going to capitalize on increased spending power.
Here's a thread in 2019 re: builders rates. https://www.propertytalk.com/forum/forum/property-investment-forums/new…-
Sandie seems pretty typical of what you see daily in the Facebook property investor group.. about to undertake some residential building/renovation work, but no clue what a LBP is, and doesn't even understanding the reference to ECON 101.
Fat to trim?? Its extremely obese the margins, I suspect. Given Australia builds for less than half of what we do, most often with exactly the same materials.
A doctors visit was $22 in 1993 now its $57,
So!
Sales off the plans were down 80% more than 6 months ago, and the OCR has gone up 1.5% since then.
6 months before that people started desperately trying to offload development sites because they had had a change in circumstances, or of heart, or they'd concluded there wasn't a bigger sucker any more. Some altruistic reason anyway... time to let the next generation have a go. A least 10 sites were offered to me, all for a tidy profit for the newly reformed developer.
Construction is a huge employer through the supply chain and while some people and a few products are going to get sponged up into helping tidy up Auckland now, I am 100% convinced this is, and always was going to be, the sector that crashes first and hardest and tips NZ into recession.
Ironically it was triggered by the interest deductibility change triggering an insane demand for new townhouses. Supply crunch, cost crunch, lending crunch, engineer and council crunch, timeline crunch, COVID crunch, banks wary of new contracts crunch and finally a cost of money crunch. The chickens are coming home to roost, 9 months from an election.
Exactly, well put.
I am 100% convinced this is, and always was going to be, the sector that crashes first and hardest and tips NZ into recession.
It's a race between work drying up and the fallout from higher mortgage payments. The former will be later in the year, financial EOY for 2023 is March.
Well,the aim of the interest deductibilty changes was to encourage building rather than flipping already built homes and fix the supply issue,so I guess it worked?
Labour and National join forces for housing crisis fix, ending decades of standoff
Labour and National have joined forces behind a radical new housing policy, the Housing Supply Bill, which they say will help address the housing crisis by allowing as many as 105,500 new homes to be built in less than a decade.
https://www.national.org.nz/housing-bill-a-step-forward-with-more-to-be…
“National has long argued that land use restrictions and arcane planning rules have strangled new housing development. We have pressed for more permissive zoning rules to allow more dwellings to be built, both through intensification and greenfields development.
“We welcome the Resource Management (Enabling Housing Supply and Other Matters) Amendment Bill as a much-needed step forward. It will make it easier for new dwellings to be added to existing sections in New Zealand’s major urban areas, increasing competition for buildable land, and reducing the complexity, cost and delays currently caused by the resource consenting process.
“Today National and Labour are coming together to to say an emphatic ‘yes’ to housing in our backyards.
The stratospheric boom came straight after interest deductibility was removed. I'm at the coalface and saw it. The other stuff didn't really change much, just made it possible for more intensification over time (without carparks!)
My point being more houses = good...unless folk were hoping that their 3 beddy Clendon rotbox was going to be worth 2 mill by 2025.
Good. Well done Greg
look at the consents for townhouses!
Cities will become high density areas, and space will be the ultimate luxury.
ACT policy on housing:
https://www.act.org.nz/policies/housing
By contrast, ACT’s replacement for the RMA would make it much easier to get building. We would:
- Restrict the right to object to neighbours who are directly affected by the project
- Allow neighbourhoods to vote to exempt themselves from many planning rules
- Create a new Planning Tribunal to determine compensation for affected neighbours who hold out from negotiations to loosen planning rules
- Reduce the need for consents when infrastructure projects use a Code of Practice to manage environmental effects, saving billions of dollars and reducing years of delay.
The last couple of ACT policies I've seen in the flesh have mentioned starting a new committee, tribunal etc.
Also, the above seems very convoluted for libertarians when it comes to property rights!
I would hope that local outhorities around the country will re-write the rule books around approving new dwellings on flood-prone land. This is a take from an article on Stuff to do with flood damage to properties in Mangere this week:
Kāinga Ora acting deputy chief executive for the north, John Tubberty said the agency was having to work quickly after widespread damage – and extra demands from families needing emergency accommodation.
“We’re concerned about the extent of flood damage to new Kāinga Ora homes in Ventura St, in Māngere,” he said.
Auckland Council red stickered many of those houses after the flood.
“These are new homes that we hoped would last for many decades. We will be thoroughly investigating how and why they failed,” he said.
I wonder as to the extent of new subdivisions being approved for flood prone areas where their drainage wouldn’t cope with such deluges.
Sounds like '3 waters' might be required to fund some new drains...
Resource consent yet to be lodged for 600-home development in Napier - NZ Herald
well stop building on flood planes....
I heard a few months back that while KO cared about their housing not flooding, they didn’t really care about the courtyards in the housing flooding. I was a bit stunned by that, although I kind of get it, in terms of priorities.
And so it begins. Abandoned half built sites and sites with groundwork done but no progress and for sale (eventually for years) are the classic visible signs of a build boom that's busted. Have a look around your own neighborhood, I'm seeing it everywhere in Rodney.
I have told the story before, but yes this happened in a big way around the mid to late 1970s. I remember when I was a kid the property next to my parents having foundations done and a few block walls, then it all came to a screaming halt (not sure of exact year, probably around 1977). Didn’t proceed for about 4-5 years.
my brother and I had a great time in it pretending we were in a war zone. It was a big, terraced site, was great fun for us, haha ( probably very dodgy in terms of H&S) Not so much for the builder
One tree point.
...3 sites, over 1090 sections, all pre sold to housing builders, real estate co's ( generation homes etc ..) and they have no buyers .. why. .
1. Too expensive now
2. No buyers in market
3. Being staged developments, nobody wants to live with the dirt, noise, vibration, and trucks from 6am to 7pm,..
4. Potential flood zones!
Cool photo - motivated team, fussy about their safety gear and professional appearance. Might be what the last few NZ builders look like next year.
Maybe between shifts. Drinking beer? In the past couple of years I have twice witnessed builders smoking joints on their ‘smokos’
Insurance used to be based on ....
The idiots pay more. The careful pay less ..... Thus people took more care!!!!!
Now the insurance thief's use are " your all in it together" averaging system which means...
The good get punished by the bad... The bad claim on everything cos they don't get punished and the good pay thru the nose .
Take car insurance. ..
Live in Kamo and you pay more than Waikanae cos of the thefts in kamo.
So poor good people in Kamo are screwed!
Insurance companies Need competition and regulation.
Does anyone know where to see stats for building consent applications rather than building consents being approved?
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