The number of new dwellings consented in April dropped sharply.
According to Statistics New Zealand, 3719 new dwellings were consented in April, down 30% compared to March, and down 6.9% compared to April last year.
However it is too soon to say if the decline was part of a longer term trend.
That's because new dwelling consent numbers usually decline in April compared to March, and much of the decline was for apartments (-44% compared to April last year), and retirement village units (-42% compared to April last year). The monthly figures for these can be volatile due to the size of these developments.
However one long term trend readily apparent is the increasing popularity of medium density housing such as town houses and home units.
Stand-alone houses have long been the most popular type of new home being built in NZ and although their numbers continue to rise, multi-unit dwelling numbers have grown at a much faster rate. And in April the number of townhouses and home units consented came within a hair's breadth of overtaking stand-alone houses.
There were 1653 stand alone houses consented in April compared to 1625 townhouses and home units. It's likely that townhouses and home units will overtake stand-alone houses in the next few months (the interactive chart below shows the monthly trends in building consent numbers by types of dwellings).
The value of consents for structural alteration work to existing homes also dropped away in April, with $185 million of structural alterations consented, down from $235 million (-21%) in March.
That took the total value of all residential building work consented in April to $1.797 billion, down from $2.291 billion (-22%) in March.
In the year to April, 50,583 new dwellings were consented throughout the country, up 18% compared to the previous 12 months.
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Building consents - type
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23 Comments
Watch these stats continue to weaken for the balance of 2023, as I have been predicting since mid last year.
Builders will continue to be busy till later in 2023, then the pipeline will slump.
look for big job losses in residential construction late 2022/early 2023. And Aus is slumping too, so there won’t necessarily be jobs to turn to across the ditch.
HI HM,
You say "weaken for the balance of 2023" do you mean 2023 or 2022. 2023 is fair way off.
It'll start weakening early 2023 I think. Currently frame & truss is out till early 2023 so a lot still left in the pipeline to come through. Once those jobs are complete though the amount of building will drop considerably.
Govt needs to get its A into G to try and plan for the future when all of our tradies are out of work.. I've emailed my local MP but it's tumbleweeds so far.
Agreed, I feel there will be some pain within the building sector late from 2022.
Sorry, rushed typing. Yes I meant balance of 2022
HM do you think NZ has caught up with the shortfall now?
Yep pretty much, especially as emmigration will accelerate.
Last month I turned down a job as an estimator with a group home builder. I'm currently in civil infrastructure but would have loved to move into residential construction as it's more aligned with my part time course.
The company cited having 50 odd houses on the go but I was concerned this book of work could evaporate in 12 months time. Civil infrastructure is close to the local and central government teat for job security.
Good call.
Stay with work aligned with government infrastructure. Steer clear of work or jobs heavily exposed to residential development.
This should be Kainga Ora's time to step up and absorb some market capacity as well as achieving more state home builds in a shorter time. Employer of last resort while ensuring people have value-adding work.
Emphasis on 'Should' be....
Some of the trades are already becoming more competitive as they try to secure new work.
New builds have gone off a cliff but this will not help with price falls. The housing market has really stalled here in Tauranga. Notifications from trade me on price falls for those on my watchlist but most sellers still sticking to their guns.
They can "stick to their guns" but it's only going to get worse, still 7 months left in 2022.
Buyers can comfortably sit out longer than sellers when there's no desire to pay for an overvalued cardboard box...
If wages catch up to inflation, the economy overheats and heads into a recession. If wages fall behind for too long, those struggling to afford basic necessities become desperate enough to offload their oversized mortgages.
Either way, a high inflation environment will distress recent buyers in insecure jobs.
Doesn't look like living cost inflation is going anywhere but up over the months to come.
Listings for unsold new build townhouses are now piling up on TradeMe. Anyone building into what is already a bust needs their head read.
... you wanna tell that to Megan Woods , or can I ?
Wouldn't waste your time.
That woman is absolutely hopeless.
I wouldn't ever write to her again, based on my experience:
- crazy time delay in response
- Once I got a response, it was disingenuous, full of waffle and political rhetoric, and ultra defensive
If the developers stop building presumably the builders will start laying off staff. When will that start?
Some builders aren't seeing it yet, others are....saw on social media some quoting $80/h plus 16% margin on materials....that works out to around $160k for labour alone on a 3-5 bedroom house....add the materials at a similar rate of 180k plus civils and local infrastructure at around 140k plus land at 150 - 500 k depending on site size and we have a non-viable project in the affordable/median end of the market e.g. 160 + 180 + 140 = 480 k plus land and finance costs....no build no go...something has to give....charge rates, material rates, land rates. I think that it has started already; some that have seen the cycles are planning forwards securing work, whereas others are not seeing it and trying to charge the boom rates (evidence is on NZ social media).
Max Key might beg to differ
Hard to unpick the reasons for weakness though, it could be driven by:
Rates
Sticker shock (i.e. Inflation)
Building materials bottlenecking
No it's not hard, and it's everything I've been talking about for a year:
- Soaring input costs
- Soaring cost of finance (both on developer side and buyer side)
- Plunging house prices
People are wringing their hands as if this has come from nowhere. It hasn't. It was so easy to forecast it's not funny.
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