Outlook for residential construction remains strong; new dwelling consents bounce back after lockdown

Property

The number of new homes consented in the lockdown-affected second quarter of this year was just three less than the same period of last year

30th Jul 20, 11:32am by Greg Ninness

The residential construction industry looks set to continue its recent momentum, with new dwelling consents bouncing back strongly after the Level 4 lockdown in March and April.

The latest figures from Statistics NZ show that the decline in new dwelling consents during the lockdown was not as severe as might have been expected, dropping from 3285 in February to 2915 in March and bottoming out at 2174 in April, then rising again to 3562 in May and 3477 in June.

That meant consents were issued for 9213 new homes in the lockdown-affected second quarter of this year, which was just three shy of the 9216 issued in the second quarter of last year.

The figures also showed a clear trend towards more intensive housing, with 1071 townhouses and units consented in June, which was the first time the number of townhouses and units consented has exceeded 1000 in a single month.

In the 12 months to June, the number of townhouses and units consented was up 33.7% compared to the previous 12 months, while retirement village units were down 3.6% , apartments were down 4.2% and stand alone houses were up 3.3% over the same period.

Statistics NZ said the number of homes being consented as a percentage of the population was also rising.

About 7.6 new homes were consented nationally for every 1000 residents in the June year, up from 7.1 per 1000 in the previous 12 months.

That is still well below the peak of 13.4 new homes consented per 1000 residents achieved in the 12 months to December 1973, but well up on the low point of just 3 new dwellings per 1000 residents achieved in the 12 months to July 2011.

In Auckland, which has faced some of the most critical housing shortages, 1439 new dwellings were consented in June, up 24.9% on June last year.

The interactive chart below shows the number of new dwelling consents issued in each region each month.

The second chart shows the national trends in the types of dwellings (apartments, houses, townhouses etc) consented each month.

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Building consents - residential

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Source: Statistics NZ

Building consents - type

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Source: Statistics NZ

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32 Comments

by tothepoint - d… | 30th Jul 20, 11:57am 1596067054

Hopefully, this is an omen for a boost in the supply of housing - and a fall in house prices.....

But I fear this is just my wishful thinking.

TTP

by J.C. | 30th Jul 20, 12:07pm 1596067646

For the omens, you need to look elsewhere. This is largely irrelevant and is the outcome of past decisions.

by gingerninja | 30th Jul 20, 5:27pm 1596086847

Exactly. Most building consents take months to happen from start (design phase) to finish (granted consent). I started the process of my own Resource Consent April 2019 and i'm only just at the stage now of the Planner putting together the application. The first stage was a Land and Topo survey, then Geotech, the engineer and architect in a pissing contest for months yadda yadda. Now i need to brown nose my neighbours a bit and then submit the application and wait a few months for Wellington council to bestow their approval. Would I have started this process if I had thought a global pandemic and recession would happen? Hmmmmm.

by Rob Reid | 30th Jul 20, 5:36pm 1596087366

Does not sound like fun.
I guess it's too late for you, but do you think the RMA rewrite addresses the main issues?

by Theoracle | 30th Jul 20, 9:43pm 1596102205

I've been going a year to get a simple subdivision done. Painstaking.

by EmperorXi | 31st Jul 20, 10:13am 1596147195

Council Clerks are great can kickers, a lot of them do their best to baffle people by spinning regulatory technicalities, making you wallow for longer.......

by nigelh | 31st Jul 20, 1:28pm 1596158907

Have been looking to buy a section and have a house built for the last three years. Since I'm retired i can project manage myself and I'm technically orientated and have an interest in building design and construction.. If you have a full time job not so easy. Here in NP the process does not seem so difficult or time consuming that you can't apply yourself once you have the basic house plans. The trick is to lay your house out on the section in the right position to confirm to Council regs. If you've chosen the right architect this should be no problem. Surprised you had to have a topo done. In NP it's available on the publicly accessible GIS. Maybe not to extent for house construction but certainly to get a very good idea of earthworks and foundation height requirements. More detail may be required if you are building on a "cliff". In my book anything greater than 10deg. slope is a cliff. No point in doing detailed geotech until the house has been located and foundation position known. If a new development there has to be a basic geotech done on three or four areas but still needed for final foundation design. In essence the majority of people have to hire an architectural designer, maybe a planner and a builder and just write the "cheque" out during and when the house has been built. Oh yes i forgot the majority of people forget to read the contract/.

by Roger the lodger | 30th Jul 20, 12:08pm 1596067696

TTP sadlyI think your fears are justified. The reason for the uptick is the increasing price of existing houses. Tywford has given up on increasing land supply and has gone the intensification route. High density construction is twice the cost per square meter as standard housing. So how can the prices drop?
It is a tragedy for young people in NZ. Prices are miles higher than when this government got in. There is no hope while Twyford tries various policies doomed to failure.

by GV 27 | 30th Jul 20, 1:03pm 1596071001

I keep seeing the 'people don't need a quarter acre!' (which I've literally never seen anyone in Auckland seriously suggest in my life) as an excuse to why we should accept two bedroom 70sqm apartments that cost $750K+.

Want four bedrooms or an apartment big enough to have a family? Moonbeams. You're better off never having kids and buying a lifetime supply of socks.

by ShoreThing | 30th Jul 20, 12:26pm 1596068788

Agree - except you're actually just better of leaving NZ. Go enjoy higher wages, lower living costs and more sane property markets elsewhere.

by richard1965 | 30th Jul 20, 5:58pm 1596088688

They do try but does Labour or any government really wants house price to fall ?

Irony they want house price to be affordable without any price correction - may be looking for match box houses like seen in many asian countries to avoid slums.

by EmperorXi | 31st Jul 20, 10:18am 1596147539

A lot of parts of Auckland have already begun to look like slums, with usually the first home buys rushing in to buy the boxy stuff, resulting in dozens of cars parked on either side of the road.

by Fritz | 30th Jul 20, 6:06pm 1596089213

High density rezoning will also increase property prices in the large areas being rezoned, and therefore also lift the entire market.
Because of this I now think there will be minimal decline in prices in Auckland.
Nice one Phil and David!

by peter.may | 31st Jul 20, 9:55am 1596146159

In our area (Manawatu) the biggest driver in new house prices is the cost of land. Having said that, rarely a week goes by without receiving notifications of price increases. This mornings notification - increasing copper price translating into increasing electrical cost

by Boatman | 30th Jul 20, 12:26pm 1596068781

Apparently there are proposed changes to Trust Law coming . Can we get some news on what this is about and the implications

by waymad | 30th Jul 20, 5:03pm 1596085399

Lots more compliance is how my legal advisers put it. Expense, and annual disclosures of potential interest (distributions etc) to beneficiaries. Plus the old reasons for having one have largely been overtaken by a combination of case law and legislation. T-day is end of January 2021. Tomorrow my own trust goes Poof! - assets returned to beneficiaries, vesting date brought forward with a one-sentence Rissolution (as Wol would say). This should not be taken as actual legal advice, as I'm a 13-year-old Cairn Terrier with advanced keyboard skills.

by Advisor | 30th Jul 20, 12:42pm 1596069721

You don't need to be a property portfolio investor or a DGM to acknowledge the fact that our residential construction sector is a pillar for our socioeconomic success and that we should welcome this as good news.
The sector is more than just a means to build assets for speculation; working in construction trades seems to be one of the few avenues available to the average Kiwi to get ahead in life, especially to those who can't do a challenging study programme at uni.

by nz-it-worker | 30th Jul 20, 1:40pm 1596073247

Is it a sector that relies on perpetual aggressive population growth for it strength?

by waymad | 30th Jul 20, 5:05pm 1596085525

Not entirely - it's just a matter of waiting for the old, draughty, wooden shacks to rot sufficiently to convince their owners to rebuild....

by youngdumbandbroke | 31st Jul 20, 10:15am 1596147336

Provided they can afford it with NZ's ridiculous materials prices

by EmperorXi | 31st Jul 20, 10:23am 1596147820

Those average folks have made a killing, picking up ramshackle properties and doing some low quality refurbs has made most of the old geezers in the trade millionaires by now.......

by bw | 30th Jul 20, 12:50pm 1596070223

There's only one factor that determines the price of any asset, and it's not supply and demand - it's the capacity to pay.
In property's case, it doesn't matter if the dwelling density is 2.36 per house or 23.6 for that same house. All that matters is if any buyer(s) can pay the price needed for the transaction to proceed.
New Homes Consented stats aren't going to be the determinant of future prices levels, it's going to be the Employment and Wages ones that are.
(eg: What are Real Estate Agents going to do if turnover in their industry collapses, as it has in hospitality and tourism? Look at their personal portfolios and figure out which, or if, they can sell some portion/all of it to keep the financial wolf from the door)

by EmperorXi | 31st Jul 20, 10:32am 1596148356

Real Estate Agents are usually the first casualty, most of them have been living in paradise whilst palming off overpriced crap to over enthusiastic fools who thought they're equally clever, I personally know of an agent who has been adding a million dollar house every year to his portfolio since 2014. Would love to see this conniving lot react to rough times ahead.........

by theglc | 30th Jul 20, 2:03pm 1596074636

Any inside knowledge on construction projects being canned?

From some supply sides Ive heard demand has fallen off a cliff.... very quiet

by gingerninja | 30th Jul 20, 5:16pm 1596086192

I met one chap who runs a building company in Auckland and he is expecting to be made redundant. Whereas all my tradies are rushed off their feet in Wellington. Much of that is definitely back log though. For instance, my builder was supposed to have built our extensions in March/April and was due to start another project after but then he couldn't start with us till after lockdown. He is also getting a lot of enquiries but says they haven't as yet translated into any contracts. He thinks people are definitely wanting to go ahead with builds and renos but are not feeling as confident about committing because of house prices and accessing credit.

by Rob Reid | 30th Jul 20, 5:40pm 1596087629

I know an Auckland builder whose firm is super busy, but he says some other AKL firms are on the way out.
We are in the chaotic noise phase.

by Fritz | 30th Jul 20, 6:09pm 1596089376

Rather than peripheral things like worrying about carparkng rules the government should be buying sites with designs and consents and contracting builders to build them.

by Casual Observer | 30th Jul 20, 2:48pm 1596077321

Spoke to a southern builder of high end homes (seven figure builds) who said they are having to turn away about 30% of enquiries for houses/house designs so far, as the demand since covid, is greater than they could cope with. They have been surprised by the level of interest and orders.

by richard1965 | 30th Jul 20, 5:54pm 1596088464

So Boom Time Ahead !

by Fritz | 30th Jul 20, 6:27pm 1596090472

I have heard it's very patchy out there. The comments here back that up.

by wortho | 30th Jul 20, 10:18pm 1596104294

So new homes consented is finished? Or is Building Consent, Yes, you good to go with that plan? Or is this buildings signed off as built and done? Just curious cause my immediate neighbour just got sign off, code of comp after 17 years, yes I know COC. So consent must be OK to build, yes? Not actual houses available? Therefore, the housing companies around me, who now have surplus tradies available, can go for consent on their spec homes- Marsden City to be precise, look it up, hell we were going to have 5000 students here doing big IT projects a few years back. We got some beaut empty show homes, more coming by the looks.
Meanwhile, ponzi Auckland house prices mean (well deserving, hard working) older couples sell up n buy here, pushing our house prices up, young coupes got not show. Unless they want to go to “Marsden city”. But there is yet to be done houses with building consent eating up the airspace, waffle of realtors pushing up the price.
Just commentary.

by peter.may | 31st Jul 20, 9:52am 1596145945

Consent means you areready to start the build