A record 51,000 new dwellings consented in year to May

Property / news

Residential building work now worth $22.5 billion a year

1st Jul 22, 12:21pm by Greg Ninness

Developers are showing no lack of enthusiasm for housing with a record 51,015 new dwellings consented in the 12 months to the end of May, according to Statistics New Zealand.

That was up 17.3% compared to the 12 months to the end of May 2021.

Stand-alone houses remain the most popular type of new home being built, with 24,536 consented in the year to May, followed by 19,656 townhouses and home units, 4037 apartments and 2786 retirement village units.

However townhouses and home units provided most of the growth in dwelling consents, with their numbers up by 47.7% in the year to May while growth in stand-alone houses was almost flat at 2.1% for the year.

Significantly, the development of new apartments may also have flattened out, with apartment consent numbers up just 1.3% in the year to May, which followed on from a 5.0% decline in the year to May 2021.

That took the total value of all building work consented in the 12 months to May to $31.4 billion, up 19.5% on the previous 12 months.

Of that, new dwellings accounted for $20 billion (up 23.6%), structural alteration work to residential buildings another $2.5 billion (up 15.1%), and non-residential building work another $8.9 billion (up 12.3%).

The Auckland region accounted for 42.5% the country's new dwelling consents, with 21,688 issued in the 12 months to May (up 16.8% on the previous year), followed by Canterbury 8529 (+34%), Waikato 5149 (+12.0%), and Wellington 3899 (+21.4%).

Interest.co.nz's quarterly, regional analysis of residential consents by average value, average size and and average value per square metre of dwellings consented, is available here.

The interactive tables below show the monthly consents issued by dwelling type and the total number of dwelling consents issued each month in each region.

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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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40 Comments

by Tee | 1st Jul 22, 1:09pm 1656637764

Hurray, can we now lay to rest, the irrefutable fact that there is a shortage of houses.

by Advisor | 1st Jul 22, 1:48pm 1656640131

Those claiming all this was simply a supply side problem don't want to see the obvious - construction supply took years to ramp up after those in the industry got badly burnt in 2008 but demand was fueled by simply policy tweaks around aggressive rate cuts, money printing and visa stamping.

For example, it took 30 years of cribbing for the Labour party to finally reintroduced apprenticeship support for building and construction trades.

by Te Kooti | 1st Jul 22, 2:55pm 1656644139

You do realise consent doesn't = new dwelling. So many of these consents will never see the light of day, construction firms will go under and banks pulling funding.

The housing shortage will get worse, not better. Do not kid yourself that renters are in for halcyon days, they're not.

by Nzdan | 1st Jul 22, 4:05pm 1656648345

consent doesn't = new dwelling

It's always been this way, it's not a new thing. You do have some merit in the potential for construction firms to go bust and a credit crunch, but look around at the data it's all trending towards a housing surplus.

by Te Kooti | 1st Jul 22, 4:54pm 1656651292

Of course not, but in this market far fewer will be constructed than on average.

by HouseMouse | 1st Jul 22, 5:14pm 1656652494

Yes. In boom times quite a large proportion of consented dwellings get built. This proportion is likely to become much smaller over the next two years.

by lowercase capitalist | 1st Jul 22, 6:36pm 1656657407

I wonder if this will dampen the rate of the eventual recovery, people put consented builds on hold while the market is tanking and at the beginning of the next bullrun start building.

by HouseMouse | 1st Jul 22, 7:21pm 1656660110

Yep quite possible, and I know a couple of developers who know things are stuffed for at least the next couple of years but are looking to the next bull run circa 2024 onwards

by IT GUY | 1st Jul 22, 1:26pm 1656638797

Not sure how many of these will get built......

by Uninterested | 1st Jul 22, 3:31pm 1656646280

Yep. It's an adjustment (overshoot) phase. Lots of new densely packed houses with almost no section which are not selling at their elevated prices. There will be lots of developers right now doing calculations on how low they can sell for and still hopefully make a (tiny) profit.

A developer down the road sold out just prior to things halting. First thing they did was to buy a new Aston Martin SUV! Nice brand but bad taste model in my view. Purely for show.

by theglc | 1st Jul 22, 3:38pm 1656646729

seeing heaps of completed developments unsold round my area of Akld central west

there will be a gib oversupply in a few months...

by WestieAJ | 1st Jul 22, 3:44pm 1656647076

Deploying borrowed capital and consuming expensive energy to create an asset that is declining in value. NZ's equivalent to Bitcoin mining.

by Advisor | 1st Jul 22, 2:05pm 1656641117

There will always be future demand from migrants looking to move to NZ. The population ponzi is meant to continue into oblivion: NZ continues to offer easy an pathway to permanency as well as a backdoor entry into bigger, better economies. All 4 parties in Parliament are practically in favour of low-skilled migration.

No other reason a developer would squeeze together multiple 65m2 2-bdr townhouses on a small piece of land in the leafy suburb of Wainuiomata.

by WestieAJ | 1st Jul 22, 3:54pm 1656647640

Those people arrive with no money and usually a substantial debt to whoever facilitated their visa. Their only option is to rent. If not enough houses exist then someone needs to be prepared to outlay a grand a week in interest, rates and insurance in exchange for $800 (if their lucky) in rent. It works when interest rates a falling constantly for 10 years and property values are rising. But when the economy finds reverse gear its a different story.

by Yvil | 1st Jul 22, 3:12pm 1656645134

Except it's very hard to live and raise a family inside your bitcoin

by the Joneses | 1st Jul 22, 3:52pm 1656647532

Living and raising a family in an overpriced house isn't easy either. Especially with mortgage rates increasing.

by taimaiakka0 | 1st Jul 22, 2:03pm 1656641015

What happens, if someone, who do not have deep pockets to hold and /or unable to sell that was expected during housing boom.........lot of unanswered question, will only know with time.

by nktokyo | 1st Jul 22, 2:19pm 1656641943

Ready for a wave of fully consented development sites?

by Final Account | 1st Jul 22, 2:23pm 1656642224

Everywhere is under resourced and under pressure. What will give first. Who is meant to build all this stuff and with what?

I think every consent issued now ( for the 2nd 1/4 2022) has baked into it a 25% chance either the developer, builder or client will go bust. Heck even the suppliers are at risk.

Rising interest rates stuff your borrowing and payment power, rising available property inventories stuff your sales and or lease/renting opportunities, supply chain stuffs delivery, budgets & timeframes, labor shortages stuff delivery, consultants & local councils doing their best but not up to the task with quality control, documents getting stamped that don't really stand up to any scrutiny. What a mess.

by Squishy | 1st Jul 22, 2:51pm 1656643918

Hopefully they get built and support the building industry. The worst thing to have now would be a construction crash just when housing is starting to get beaten down. I want a house price KO.

by RickStrauss | 1st Jul 22, 2:55pm 1656644148

Let's hope Kainga Ora and Kiwibuild are ready to hire builders as companies fall over. They need to absorb them and have them working on more supply.

by HouseMouse | 1st Jul 22, 3:19pm 1656645569

Nice in theory but….

KO don’t hire any builders. Building companies are contracted to build KO housing. And competitive tenders are used.

Once builders are stuffed in the private sector it’s probably game over.

and those who aren’t stuffed and are doing well (until they aren’t) will prefer private sector work.

the other thing is while it looks like KO are building a lot, they don’t have a huge number of new projects commencing every few months. Their design and procurement processes are painful.

by Dale Smith | 1st Jul 22, 3:45pm 1656647111

And builders have gone bust building for KO.

They have been KO'd, which is the public version of being 'Fletchered.'

by HouseMouse | 1st Jul 22, 5:16pm 1656652561

Hahaha nice

by theglc | 1st Jul 22, 3:47pm 1656647274

some builders I know kept on building in the last downturn even when the development was just breaking even. At least the crew were still drawing a wage for their work.

This will happen again for those who are in the position to do so, just to keep things moving.

The price of land is likely to take quite a hammering though.

by RickStrauss | 1st Jul 22, 3:52pm 1656647529

Should never have let Treasury put the knife into the Ministry of Works, eh, in retrospect.

A builder is often simply a company structure that encompasses some varied levels of experience, all of whom could be hired. The project pipeline is probably the bigger issue unless they move quickly and buy up land and put templated builds on.

by HouseMouse | 1st Jul 22, 5:19pm 1656652741

Yep agree re MOW.

also agree re ‘template’ designs. KO are far too bespoke. I get that they want decent quality, but if you have decent quality standardised plans then what’s the problem.

by Nzdan | 1st Jul 22, 4:09pm 1656648582

A big Kainga Ora development currently being tendered for 2000 homes in Porirua.

https://kaingaora.govt.nz/news/major-government-investment-in-water-and…

Part of this:

https://kaingaora.govt.nz/working-with-us/housing-acceleration-fund/

by Gummy Bear Hero | 1st Jul 22, 5:54pm 1656654848

Happy Birthday Kiwibuild ! ... 4 today ... it's exactly 4 years since Phil " the tool man " Twyford thrust his jaw out towards the cameras and proclaimed we will build 100 000 affordable houses over the next 10 years ...

... 4 years on , 1366 have been completed ... at this rate , the last of the 100 000 will be finished 293 years hence ... hip hooray !

by HouseMouse | 1st Jul 22, 5:58pm 1656655129

Hahaha nice work Gummy.

cheers (as I down wine number 3)

by Gummy Bear Hero | 1st Jul 22, 6:43pm 1656657828

... you're welcome : I'm on craft beer # 3 : Renaissance / Test Lab / Derelict ... life is good my friend : cheers !

by Markus | 1st Jul 22, 7:39pm 1656661187

If you want a housing KO, what you will get is a great depression, bankrupt banks and mass unemployment. You are unlikely to benefit from that.

Unfortunately, our central bankers, who have initially created the housing bubble with 0.25% interest rates, seem to be on your side, with interest rates almost ten times higher now.

by Yvil | 1st Jul 22, 3:08pm 1656644880

A big congrats for the linked Residential building analysts tables. They are very telling. Thank you Interest

by realterms | 1st Jul 22, 3:39pm 1656646758

Interesting to see that the average consented size is consistently falling across all categories. And not just a mix with more townhouses in, stand alone houses have fallen consistently over the last 12 years.

by Dale Smith | 1st Jul 22, 3:42pm 1656646945

This highlights everything that is wrong with NZ housing, ie the way our Politicians think.

It use to take approx 5 to 6 months from thinking about building a house to moving into it. Basically, supply could equal demand in developer real-time. And you didn't have to see that far into the future to see the trend so they could pull back just as quickly as they could ramp up.

Now it takes years so the demand and supply cycles are completely out of sync, so just as demand drops, then potential supply comes on stream and vis versa.

by OldSkoolEconomics | 1st Jul 22, 3:59pm 1656647946

Sounds right.

We are being told there are now more houses for sale, houses for rent and new builds than the market needs (or can afford?). So house prices and rents are plummeting.

I guess the builders will now go bankrupt , landlords dump their houses, consented houses wont be built, tradies move overseas or whatever then in 4 years as we start to come right again we have another shortage of houses and need to find builders and tradies again... and they will all be gone so we wont be able build quick enough to catch up again, then we will get told there is a shortage and house will prices start to rise again (and somehow we will forget last time and the economic boom-bust cycle will continue).

Humans are funny sometimes.

by HouseMouse | 1st Jul 22, 5:20pm 1656652843

Yep!

Rinse and repeat.

idiotic

by Nzdan | 1st Jul 22, 4:17pm 1656649040

23 Jan, 2015 -> Housing warning: It's an Ireland repeat

https://www.nzherald.co.nz/business/housing-warning-its-an-ireland-repe…

NZ and Ireland

Similarities

• Role of media in hyping up the sector.

• Risk of people leaving, a net migration reversal.

• Big construction upswing increasing supply.

by HouseMouse | 1st Jul 22, 5:22pm 1656652946

Blast from the past!

pre-OneRoof and it’s unashamedly spruiking approach to property???

by jimmyH | 3rd Jul 22, 12:26pm 1656807970

Inflation,if it runs at a cumulative 30%, for instance,from 2020 to 2025, and nominal House prices fall 25 %, ( an Auckland central ordinary home,going from 1.5 million to 1.125 million) ,then that ending 1.125 million price is worth $787500 in 2020 money. And that's what happens in an ordinary slump. But exacerbated this time by the additional bump the peak got pushed ,through Covid period loose monetary policy. Usually for example ,we might see a 4 year slump,with 10% fall back in nominal price ,and an underlying 3% housing inflation annually,but not being expressed until the upswing, so we catch 10 years of 3%+ housing inflation,and the 10% drop reinstated, and those two factors alone,account for the majority of the upswing on the next cycle. This time ,the same,but increased magnitude of swing ,as the pendulum got an extra shunt on its upswing with LVR removal and 2% mortgages.

Inflation must be reckoned in, not just nominal " Headline" price of the assett.

Easy to understand a 2020 dollars equivalent of 787 k, for a house price,that falls from 1.5 mill to 1.125 million by 2025...right?