The number of new dwellings consented per 1000 residents rose to 9.5 for the year to November, the latest data from Statistics NZ released today (Thursday) has revealed. That is up from 7.6 per 1000 in the year to November 2020.
But it is a long way from the all-time record which is 13.4 new dwellings per 1000 residents which happened almost fifty years ago in the year ended December 1973.
Currently, Auckland and Canterbury regions showed the highest number of new homes consented per 1,000 residents with 11.9 in Auckland and 11.6 in Canterbury, followed by Waikato with 10.0.
While the consenting rate is far from all-time records, the actual number of new dwellings consented to be built reached 4688 in November, which is an all-time record for any month. The previous highest was 4490 in August 2021.
The key driver is the rise and rise of consents for townhouses.
Auckland's consent levels reached a new record high too in November, bringing the annual level to more than +20,000 new homes for the first time ever. For Canterbury, the level is more than 11,500 for the year. For Waikato, they now exceed 5000 for the year, also a record.
The value of consented alterations and additions (renovations) was up +22% over the 12 months to November, to $2.3 bln which is a record high. For Auckland, renovation consents were up +22% in the year to November, but are still lower than the record high which was in July 2018. For Wellington, the November 2018 reno consent levels were an all-time record high. For Canterbury, the record high was in 2014, but the current levels are +12% higher than a year ago.
Building consents - type
Select chart tabs
45 Comments
Think about it.
I am not talking about building underway (although some of that could face issues too)
Where's the demand for new housing coming from? There was a lot of demand even 2 years ago, when developers could build and sell 2 bedroom townhouses for 600-650k in lower value Auckland locations.
Now, those same townhouses need to be sold for 800-850k, because of the rapid escalation in.land and construction costs.
That's a big difference in price for FHBs (and investors).
Then you factor in both rising interest rates and greater scrutiny of lending.
As I have said before, because of the existing pipeline we won't actually see the rapid slowing of building till late this year or early next year.
Remember most development is off the plan these days, if buyers have agreed to a price of X when they execute the Sales and Purchase agreement, then they are obliged to pay that. So in a way more risk lies with buyers than developers, at least in terms of potential house price falls. Although plenty of risk for developers too, with soaring construction costs.
But I'm more interested in what happens beyond the development currently underway.
Ie. how much New development will commence after say April this year. My prediction is - much less than has been the case over the past few years.
So once much of the the current pipeline is complete by later this year, a big fall-away in house construction hitting late 2022 / early 2023.
If I am right, we should start to see building consent issuance starting to fall away by winter. There will be some naive, amateur developers who will be late to realise what's happening though. But most should realise there's little point in pursuing building consent approvals if demand is tanking.
But I could be wrong, residential construction might keep going gang busters over the next couple of years, defying these things and history (where there has always been boom and bust in the sector). I guess time will tell, and I am sure people will let me know if I am wrong :)
My neighbour's house is sitting unfinished (he's trying to live in it with an outdoor shower and tent).
The builder is just too busy to come around, and supply woes have been ongoing for at least 6 months. Construction company failures will be a matter of cashflow, not demand.
Ie. how much New development will commence after say April this year. My prediction is - much less than has been the case over the past few years.
Some of the more experienced developers have already started slowing down, and they are happy to bank their land and consented plans for future.
Actually why it'd be beneficial to upscale Housing NZ's building capacity, including in the training of tradies. Like the Ministry of Works of old. Need to smooth the supply of both houses and skilled people during the hard times.
They don't really need to make a profit on houses, just get them built.
Like almost anything, there's too many factors to make a prediction.
At the start of the pandemic, the government greenlit a lot of extra public works, a decent chunk of these haven't even broken ground yet
There's an exodus of boomers from the cities putting demand on regional housing that won't end anytime soon.
Properties vacated by boomers are being developed into higher density
There's no foreign workers coming in to meet demand.
So yeah 2024-25 is potentially right.
Off topic: but NZ is not alone when it comes to rising rents. Tenants pay a landlord to live in a house. Landlords get paid by the house AND the tenants.
Released today, Domain’s December 2021 Rental Report shows (Brisbane) house rents rose on average by $20, or 4.3 per cent, over the quarter to $480, and by 12.9 per cent over the year to cement what is now the longest period of continuous house rent growth in the city’s history.
The second-best performing city was Canberra, where house rents rose by 12.5 per cent over the year to $675 per week.
So many variables, the number of consents doesn't matter, something else comes along to push prices even higher. The USA just had a record rate of inflation for December, not seen for decades. Like I said something else just comes along like rapidly rising inflation and the fact you cannot buy a sheet of Gib or half the wood you need at present so your stuffed one way or another. Just when you think there is a logical reason for house prices decreases, the total opposite happens.
In the case of rapidly rising inflation there should be a rapidly rising ocr and interest rate. But it doesn't look like the reserves banks will be brave enough or are actually letting inflation go on purpose to deleverage the asset owning class.
On the construction material side this will only affect the builders but wont increase prices. construction cost are only marginal on current asking prices. Let alone the already oversuply of properties
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.