The outlook for the home renovation market is looking increasingly soft with the value of building consents issued for residential alteration work in the second quarter of this year hitting its lowest point in five years.
According to Statistics NZ, the total value of residential alteration consents issued in the June quarter of this year was $425.4 million.
That's down by $115.7 million (-21.4%) from its peak of $541.1 million in the fourth quarter of 2017, and the lowest it has been since the second quarter of 2015.
Although the figures for the second quarter of this year could have been affected by the COVID-19 lockdown in April, it was the third consecutive quarter that the value of residential alteration consents had declined, suggesting the recent easing could be a longer term trend.
The number of residential alteration consents issued declined in the third and fourth quarters of last year and that decline continued in the first quarter of this year, but then picked up in the second quarter, rising from 6002 consents in the first quarter to 6593 in the second quarter.
However although the number of alteration consents picked up in the second quarter, the total value of that work declined, driven by a sharp drop in the average value of alteration consents, which declined from $75,738 in the first quarter of this year to $64,522 in the second quarter (-14.8%).
That was the lowest average value of residential alteration consents in three years and was down 19.6% from its 2016 peak of $80,263.
The downturn in residential alteration consents has been particularly strong in the Auckland and Bay of Plenty regions, where both the number of consents and their total value has fallen for four consecutive quarters.
In Auckland the number of alteration consents issued in the second quarter of this year was down 25.6% compared to the second quarter of last year, while their total value was down 30% over the same period.
In the Bay of Plenty the number of alteration consents was down 23% and their value was down 35.7% over the same period.
The softening of the alteration consent figures will be a particular concern for the building industry, because consents are only required for structural alteration work such as adding a room to an existing dwelling, which would normally be carried out by a builder, rather than simple maintenance or redecoration work which does not need a consent and which home owners may carry out themselves.
The latest figures would not have been affected by recent changes to the Building Act which mean minor alterations such a putting up a carport or shed would no longer need a building consent, because these had not come into effect in the second quarter of this year.
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