More multi-unit dwellings than stand-alone houses consented in a 12-month period for the first time as the number of new homes being consented goes through the roof

The ingredients for the perfect storm.. Inflation on materials still rising, consent hitting all time highs, sales at all time lows.. 



More articles like this to come

https://www.nzherald.co.nz/business/ebert-constructions-95-staff-face-u…

There's a significant time lag between doing all your plans and getting your pre-construction ducks lined up, and getting consent.

There's a further lag between getting consent, and completing a building.

Everyone loves a good anecdote, in the circles I bump into, there's swathes of consented homes being paused or cancelled that won't be breaking ground anytime soon. If a new home is a million bucks the cost to finance it has increased by near on 40 grand a year, and it'll be 18 months before you get it.

We in for a bumpy ride kids.

I suspect this is the backlog of applications made months and months ago. The front end sales of either developable sites or new build units has absolutely cratered

We have been hearing of more and more pressure on developers (rising costs, falling house prices and supply constraints).  Yet consents continue to rise.  Id be interested to hear the thoughts of people more knowledgeable about the construction industry, as I find the rising consents confusing given the wider context.

My only guess here is that consents are still rising as the land purchase has already occurred and is a sunk cost, so they need to follow through to recover those costs.



I'm also assuming land prices will take an outsized hit if current trends continue.  If the price purchasers are able/willing to pay falls, and the cost of construction rises, then the price a developer will be willing to pay for land would presumably fall much faster.

I am a broken record but this data means diddly squat right now.

Building consent timeframes are really drawn out, for many of those March approvals the applications would have been made in mid-late 2021 when sentiment was far less glum. 

And if you are 50-70% of the way through a consent process, you may as well see it out to approval as you have sunk most of your cost already.

The price-of-land might need to come down.. one way or another..

Asking the question again (because I wouldn't know where to look)

But are delayed builds (delayed materials etc) giving (m)any purchasers an out by using the sunset clauses that have been used by developers to bump up the 'real' purchase price in recent times?

housing new zealand moving the needle

I've personally got two consents that are included in this latest March figures. One is a new house another a unit. Both were submitted back in April 2021. Go figure!

The housing market is going downhill with no breaks. These people developer’s would be crazy to put more money into building when market is already flooded more defaults will be coming sending house price’s spiralling down.

NZ needs to keep up these consents and importantly, the build of these different types of housing all the way through to completion; alongside the needed infrastructure, businesses, schools and new communities as the population of NZ increases over the medium (3 years+) to long-term with the transitioning through/out of Covid-19 disruption.

This is what I mean by our supply and demand cycles now being countercyclical due to screwed-up Govt. land use and housing policy.

Just as the demand is reducing, supply that started to be organized up to three years ago is now just coming to market. In a typical countercyclical fashion, as one is decreasing and the other is increasing, there is a small moment in time when the market is in balance. 

In jurisdictions that have correct land-use policies, both supply and demand variables can react very quickly to each other, and the market cycles lie almost on top of each other, both on the way up, and the way down.

Thus the market is always in balance, with house prices being both stable (even though still cyclic in supply and demand) and very affordable (3 to 5 x median income multiple).

It's been quiet on the design side for all of April.  Some projects I priced for were cancelled (I usually have a high rate of acceptance).  While May is picking up a bit there will be a slow down in 6-12 months.  Difficult to say which direction the design work will go but the combination of interest rates and supply issues with construction materials is putting people off even looking at starting a construction project.

Crazy numbers new consent numbers at an inflationary time when interest rates are rising. In with House Mouse on that one, it won't end well.

I have a friend who just finished developing 62 apartments,  he did well. I told him I was very concerned about the timing of his next project of 82 new apartments, he still wants to go ahead, developing is what he does...