The number of new homes being built in Auckland continues to increase at a substantial clip.
Auckland Council issued 3534 Code Compliance Certificates for new dwellings in the third quarter of this year, up 12.2% compared to the second quarter, up 25.1% compared to the third quarter of last year and up a whopping 82.4% compared to the third quarter of 2017.
Code Compliance Certificates are the most accurate measure of new housing supply because they are issued when a building is completed, unlike building consents, which are issued prior to building work commencing.
However, building consents remain a very good indicator of future building supply and they suggest that the number of homes being built in Auckland will continue to increase and could hit 4000 per quarter within two years.
Most new dwellings are completed within two years of receiving a building consent and comparing the number of Code Compliance Certificates issued with the number of new dwelling consents issued for the same period two years previously shows a close correlation between the two, suggesting that almost all new homes that are consented actually get built with very few projects being abandoned.
The graph below shows the number of Code Compliance Certificates issued for new dwellings in Auckland between the first quarter of 2014 and the third quarter of this year (the blue line), matched with the number of new dwelling consents issued for the corresponding quarters two years previously (the orange line).
This demonstrates quite clearly how new dwelling consent numbers are closely followed by the number of Code Compliance Certificates issued two years later.
And the graph also shows what will happen if the trend continues, with the number of new dwelling consents continuing to rise between the fourth quarter of 2017 and the third quarter of this year.
That suggests the number of new homes being completed over the next two years will continue to rise, unless there is a significant drop off in projects being completed.
Although the residential construction industry faces considerable headwinds, including capacity constraints, funding challenges, cost pressures and ongoing problems with buyer affordability, it's not showing any sign of slowing down yet.
According to Statistics NZ, the total value of new dwelling consents (excluding land) issued in Auckland in the 12 months to September was $5.63 billion, up 17% on the previous 12 months and up 37.3% on the same period two years ago.
The comment stream on this story is now closed.
* Code Compliance Certificates for new dwellings issued from Q1 2014 to Q3 2019. Building consents are for the corresponding quarters two years previously.