By Greg Ninness
Aucklanders' love affair with home improvements may be on the wane with the amount they spent on major renovations down 9.1% in the year to June.
According to Statistics NZ building consents were issued for $735.8 million of dwelling alteration work in the 12 months to June this year, down 9.1% from the $809.9 million of work consented in the previous 12 months.
The decline in value was caused by a fall in the average value of the work consented, which declined from $146,966 per consent in the 12 months to June 2018 to $133,643 in the 12 months to June this year. This was the first time it has declined since 2013.
However the number of alteration consents issued was almost unchanged at 5506 in the 12 months to June this year compared to 5511 in the previous 12 months. This comes after an almost uninterrupted period of increases in the number of alterations consented each year since 2010, apart from 2017.
A building consent is usually only required for major renovation work involving structural alterations such as adding a room or removing structural supports in an existing dwelling, so minor redecoration work such as repainting or fitting new cupboards would not normally need a consent.
The most likely reason for the decline in the average value of alterations is the peaking of Auckland property prices that occurred in 2016. With no capital gains for the last three years and a risk of capital losses, home owners and investors will both be cautious about spending too much on renovation work because of the risk of over capitalising.
Value down in Canterbury
The value of alteration work consented has also been falling in Canterbury, dropping from $211.7 million in the year to June 2018 to $180.5 million in the year to June 2019 (-14.7%).
However the fall in Canterbury is less surprising because the total value of alteration work consented in the region has been in decline since it peaked at $312.2 million in the year to June 2014, as post earthquake remediation work is completed and the number of homes being renovated heads beck towards a new normal.
In other major centres the changes in alteration work were more mixed.
In the Waikato the number of alteration consents increased from 2109 in the year to June 2018 to 2231 in the year to June 2019. The average value per consent declined from $60,476 to $58,881 over the same period, which resulted in a 3% lift in the total value of alteration consents to $131.4 million.
In the Bay of Plenty there was a big jump in the number of consents from 1359 to 1575 (+15.9%). This was accompanied by a 15.2% decline in their average value, leading to an overall 1.7% drop in the total value of alteration work consented in the year.
Wellington consent volumes & value of renovations rises
In the Wellington region the number of dwelling alteration consents was the highest it has been since 2008 and their average value of $79,460 was a record high. This pushed the total value of alteration work consented to a record $226.7 million in the year to June.
That probably reflects the relative tightness of the Wellington housing market where there is a shortage of properties for sale in some areas, which would increase the attractiveness of doing up an existing home rather than selling it to buy a new one.
In Otago the number of alteration consents surged from 1848 in the year to June 2018 to 2077 in the year to June 2019 (+12.4%), while the average value of $48,320 remained near it's all time high. That pushed the total value of alteration work in the region to a new record of $100.4 million, up 12.7% compared to the previous year.
Over the country as a whole, $1.78 billion of alteration work was consented in the 12 months to June this year, down 3.2% compared to the previous 12 months.
The comment stream on this story is now closed.
You can receive all of our property articles automatically by subscribing to our free email Property Newsletter. This will deliver all of our property-related articles, including auction results and interest rate updates, directly to your in-box 3-5 times a week. We don't share your details with third parties and you can unsubscribe at any time. To subscribe just click on this link, scroll down to "Property email newsletter" and enter your email address.