Building industry disruptions reduced the construction of new homes in Auckland by 10.6% over the June year

Capacity constraints in the building industry continue to take their toll on the number of new homes being built in Auckland.

The latest figures from Auckland Council show that it issued 1246 Code Compliance Certificates (CCCs) for new dwellings in June.

Unlike building consents, which are issued before construction starts, CCCs are issued when a building is completed and are the best indication of new housing supply.

Auckland Council issued 1246 CCCs in June, down from 1532 (-21%) in June last year but well ahead of the 926 (+35%) it issued in pre-pandemic June 2019.

However the June 2021 figure was exceptionally high and the monthly figures can be particularly volatile because they can be affected by the timing of completion of large projects such as apartment blocks.

A better indication of the trend comes from the rolling 12 month monthly average.

This clearly shows a slow decline in the number of new homes being completed in Auckland, with a strong rise in completions up until they peaked in the middle of last year and then a slow decline.

This shows that the average number of new homes being completed in Auckland each month has dropped by 10.6% over the year to June.

You can see that trend quite clearly in the graph below.

You don't have to look far to find the likely culprit.

Separate figures from Auckland Council show the percentage of new dwellings that receive their CCC within two years of obtaining their building consent.

In the first half of 2019, before the Covid pandemic disrupted the industry, the number of dwellings receiving their CCC within two years of their building consent being issued was between 94% and 98% each month.

In the first half of this year that figure had dropped to between 78% and 89%.

That means that on average, residential building projects in Auckland are taking longer to complete.

If you have an industry that is operating at full capacity and it starts taking longer for it to complete work, it is inevitable that output will decline.

Given the disruptions that have plagued the construction industry over the last couple of years, initially with pandemic lockdowns and then with supply constraints, the current drop in the number of new homes being completed each month should come as no surprise.

Considering the extent of the challenges the building industry has faced recently, a 10.6% drop in output over the last 12 months suggests it may have coped better than might have been expected, and the number of new homes being completed remains well above pre-pandemic levels.

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