Building consents for new houses hit highest level since November 2007; economists surprised by strength of upswing

Building consents for new houses are continuing to surge, with the number - excluding apartments - recording its highest total since November 2007, Statistics New Zealand said today.

The 1752 non-apartment dwellings recorded in May was the highest monthly number since 2,123 in November 2007. Excluding apartments the May figure was some 34.4% higher than the same month a year ago.

Including apartments, there were 1971 new dwelling units consented in May 2013, this was 43.7% higher than the same month a year ago.

Westpac senior economist Michael Gordon said residential building consents were "substantially higher than we expected in May", indicating that the early Easter distortions of the previous couple of months "masked an even stronger underlying uptrend than we thought".

"The construction sector has entered a major upswing, and it's not just a Christchurch story," he said.

Together, the Auckland and Canterbury regions made up 57% of the national total of consents in May.

In Auckland, where a lack of new houses is driving up prices sharply, there were 628 new dwelling units consented in May, up 74% on the figure a year ago.

However, the latest month's figures were somewhat blown out by consents for 154 apartments, including retirement village units. Not including apartments, there were 474 new houses consented in Auckland in the last month, which was up 46.3% on the figure for May 2012.

ASB economist Christina Leung said the pick-up in dwelling consents in Auckland suggested relatively strong house price inflation (of about 15% in Auckland) was once again encouraging house-building in the region.

"Nonetheless, we would need to see a further improvement in house-building activity given the acute housing supply constraints in the region."

Statistics New Zealand's industry and labour statistics manager Blair Cardno said the "trend" for house building activity was now 73% higher than the historic low point of March 2011.

"While new housing numbers continue to grow, the trend is still 37 percent lower than the peak of January 2004," Cardno said.

The seasonally adjusted number of dwellings increased 1.3% after rising 21% the previous month. Excluding apartments, the seasonally adjusted number of new dwellings fell 0.3%.

The trend for the number of new dwellings, including apartments, increased for the 26th month in a row. The trend is now 73 percent higher than its historic low point of March 2011. This trend has been measured for over 30 years, and is currently 37% lower than its peak, which was in January 2004.

The value of consents for all buildings, including both new work and alterations, was NZ$1.16 billion in May 2013.

Residential building consents came to NZ$726 million, and non-residential building work of NZ$434 million is planned.

"Building consents reached almost NZ$1.2 billion this month. While the figures don’t take inflation into account, May's total was the highest monthly value since August 2007," Cardno said.

Earthquake-related building consents in Canterbury reached a milestone in May 2013, when the value of consents over the 33 months from September 2010 topped NZ$1 billion.

This comprised NZ$401 million for residential work, including 885 new houses, NZ$617 million for non-residential work, and NZ$30 million worth of non-building construction.

In May 2013, Canterbury earthquake-related building consents were valued at NZ$56 million, and included 64 new houses.