Current indications are that the number of new homes being built will decline by about a quarter as a downturn in residential construction starts to bite, with the number of new dwellings consented in April down 25.9% compared to April last year.
According to Statistics NZ, 2757 new dwellings were consented throughout the country in April, down 30.6% compared to March and down 25.9% compared to April last year.
The follows a 25.1% decline in March compared to a year earlier.
On an annual basis new dwelling consents in the 12 months to April were down 9.3% compared to the previous 12 months.
Those figures suggest the downturn in residential construction will be sudden and steep as new projects are completed.
"April 2023 makes the third consecutive month that the number of homes consented has been down by more than 25% when compared with the same month of the previous year, Statistics NZ property statistics manager Michael Heslop said.
The total construction value of all new dwellings consented in April was $1.169 billion, down 27.5% compared with April last year, which suggests the amount of money flowing into the economy from residential construction is about to decline by about $443 million a month.
The decline in consents in April compared to a year earlier was greatest for apartments -40.5%, followed by stand alone houses -32.1%, townhouses/units -18.2% and retirement village units -16.4%, although the monthly figures can be quite volatile, especially for apartments.
The number of new dwellings consented in the 12 months to April was down compared to the previous 12 months in all main centres, with Auckland consents -6.7%, Waikato -17%, Wellington Region -10% and Canterbury -5.5%.
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Building consents - residential
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105 Comments
No no no Greg!! This is actually a good news story. A fall in consents means less supply and therefore an increase in sales price as demand chases less stock- the main show in town is baaaccckk baby!!!
The reality should be that greater productive activity leads to greater wealth generation with low inflation.
Anyone care to guess how much (if any) $/sqm rates could fall?
Unless the costs come down the feasibilities just don’t stack up. Land won’t fall as much as people hope.
Remember post GFC?... Construction falling followed by price falls followed by cheap land.
To look forward one must look back!
Remember post GFC?
Post-GFC? You sure we're not still in the GFC? Did it ever end?
The skullduggery can has been kicked nigh-on to the end of the road
The problems started well before gfc with collapse of mezzanine finance
The best question asked for a long, long time!
$/sqm must fall considerably. If they don't, many of these consents will remain paper.
Anecdotal evidence suggests they are falling but not as much as they could, or should. No matter - They will. Orr will be responsible.
re ... Land won’t fall as much as people hope.
I wasn't hoping for much so I've been pleasantly surprised. Lots of good developable sections turning up, but not so many in the good places. Or put another way, the good places are being fought over and bid up. The less good need $/sqm to fall more to make developing less risky.
edited: Food for thought ... an 18 month build takes us to Dec '24.
No new houses soon - except MP Woods " wrong houses in wrong places" 100,0000 x social homes junket for the perceived homeless.
Looking at the figures it's far from being critical. We're still above 2020 numbers.
I am afraid the bleeding won't stop anytime soon without interest rates returning to very low levels.
Construction's contribution to NZ's GDP on a per worker basis in 2022 was a measly ~$88k. That's a-third lower than the rest of the economy and just 10% more than retail trade.
Despite this trend, the sector has been able to cream hefty wages and thick business margins because of runaway prices of new builds and renovations driven by excess demand. Either productivity goes up significantly from here or wages come down. Since both are unlikely in the short run, the only way to rescue the sector is to bring back excess demand.
As I have said many times for those who care (government certainly don’t care what I say), big lags at play in this data.
The cost of land is just so high that it's impossible to construct anything. We are country where is land everywhere and anywhere we can see but still buying a small patch costs excess of a million dollars. What have we become really?
It still takes a village to earn and save a million dollars over a life time.
Who can afford to construct after paying for land anyway.
The greedy lot of this country is reprehensible.
It still takes a village to earn and save a million dollars over a life time.
We are arguably a developed country. The cost of the elements on the first rung on the hierarchy of needs - shelter, food, water - should require less exchange of our human labor than when we were 'less developed'.
True we should all be on the Crypto bandwagon trying to make something out of absolutely nothing in terms of human labour.
Disagree. But that's besides the point. The collective value of the labor of the village is not related to crypto. It's more related to the fiat monetary system and all the barriers put up by the ruling elite.
Zwifter strongly suggest doing some research into Bitcoin before sounding uneducated on these types of forums.
The cost of the elements on the first rung on the hierarchy of needs - shelter, food, water - should require less exchange of our human labor than when we were 'less developed'
Except, as new industries come onboard and we 'develop', people still require the same amount of some traditional industry. Trades work, fruit, cleaning, etc. But as humans want to gravitate towards newer industries, there's a vacuum of people and skills for more traditional, menial forms of work.
This is why an interior plasterer can earn $300k a year, and someone riding a desk struggles to crack a hundy.
Except, as new industries come onboard and we 'develop', people still require the same amount of some traditional industry. Trades work, fruit, cleaning, etc. But as humans want to gravitate towards newer industries, there's a vacuum of people and skills for more traditional, menial forms of work.
You tried to conjure up a clever rebuttal to what I wrote, but didn't really think it through.
Have a look at what's getting relatively more expensive. It's weighted towards the analogue.
"The greedy lot of this country is reprehensible"
You're on the wrong website Nguturoa, this is a financial site "to help us make financial decisions", we read Interest to make money!
It's ok to make money. I am talking about Greed.
A bit sad that there is no difference between these two statements in your dictionary?
Without greed, there is no money! Without greed we would all still live in caves, without greed we would not be able to read Interest and comment on it. It's just that some people are more honest about wanting money and others are less honest about it.
Rubbish.
One can be ambitious and want fulfilment in life, professionally and personally, while earning good money.
That’s not greed.
Greed is not necessary to fuel ambition, progress and financial wellbeing.
Greed can be a very destructive thing, both individually and societally. There’s a good reason it’s considered sinful in the Bible and in fact in all great religious traditions.
It's still greed driving those things. Why would anyone aspire to a surplus, if they were generous? It's what's driving society in its endless pursuit for bigger, faster, better, louder.
It's really only arbitrary the point where we define greed. It's ok to own a corolla, but not ok to own a Ferrari.
Indeed Pa1nter, and to many hundreds of millions living without proper shelter, owning a Corolla is greed, it's just that the Corolla owner can't see it!
When neoliberalism destroyed much of the working class who worked in manufacturing, no one cared, because hey, t-shirts are now 6 bucks.
Now that the middle class can't afford houses in inner suburbs, it's now a deep question of morality and ethics.
Yip see most post below about negative impacts of globalisation.
If we could bring back manufacturing to NZ I think this would be great. But the impact on our CPI would be bad as cost of goods would be very high due to wage/salary demands.
Meaning even higher interest rates and lower asset prices.
(sounds like a great idea really!)
We are manufacturing in a sense, but only in concentrated areas.
Our standard of living would likely fall if we deglobalised. I would say we'd lose a few younger people, especially initially, because certain jobs wouldn't exist anymore, and other places would offer a materially better standard of living.
But there's the rub. Materially. This has dominated so much of Western thought for however long. Existence via consumption. Bigger, faster, and louder is better.
NZ is a pretty choice place, and depending what flicks your buttons can be enjoyed almost for free. Maybe we all become some sort of tribal Luddites or something.
Without greed, there is no money!
Yvil perhaps you have forgotten the basic human necessity of being able to purchase food and water to live?
Food and water are necessary.
Buying them, less so.
Wrong Yvil. We would still be living in caves if we were greedy. The defining feature of our species is that we are social. We would not be able to co-operate to make discoveries and build society as a species if we were driven by greed.
There is a very small section of society that is only driven by greed and self-interest. The scientific term for it is sociopathy and relates to an inability to feel empathy for others.
Some sociopaths do not know they are sociopaths.
There is a theory that small social groups had a self regulating ability to dampen the genetic tendencies towards these cluster b personality disorders. Act like a dick, and it's out of the tribe for you.
Now, with such a fragmented society and people being able to live out their lives as individuals, these tendencies are now being amplified.
Money or affluence isn't the demarcation line though.
Wrong agnostium, (as you put it so delicately an eloquently, lol). Greed is simply the desire of wanting more, and the best way to get more, is indeed to work together as a society where greed is mutually beneficial. What you call self-interest, has nothing to do with greed. Without the desire for better things, or in other words greed, there is no progress!
Yvil - the problem we face is people no longer know when they have enough.
My relatives that lived through the depression lived a very simple life and were very contented in old age. They never desired more than one home, flower and vegetable gardens. This satisfied them as they knew when they had enough to be happy.
They had no need to go out and buy up rental properties so that they could 'get ahead'.
This would make no sense to them.
The 'get ahead' line of thinking appears to be a new phenomenon - where people see life as a competition with their fellow human beings, with the goal to turn their neighbour into their rent slave so that they can have more, more, more.
To me, it is like a disease that has taken over the thinking of large parts of our society - at the deepest level this greed stems from fear (of never having enough). I look at it like a mental illness. They are the opposite of my greatest generation relatives as they never feel like they have enough and as a result are never content with what they have. I find it quite sad.
"Yvil - the problem we face is people no longer know when they have enough"
Agreed, the problem I have is that on this site, this only seems to apply to property investors, when in reality it applies to all of us, when we want better clothes, electronics, cars, etc… We're ALL part of the problem but the blame is always directed at those who have more. No one has ever said, "I'm to blame for the Indonesian worker earning NZD10/day because I want another, cheap T-shirt".
When Nguturoa said "The greedy lot of this country is reprehensible" he blames others without seeing that he is just the same to those that have less than him.
Yvil, you are again completely wrong.
When people on here ask for structural change and rules to be put in place that will personally disbenefit them, they are being the opposite of greedy. They are normally shouted down loudly on this site by those who have more than their fair share. We're not all the same.
Like I said, some sociopaths do not know they are sociopaths.
What storm?
You really like telling people that they are "wrong", meaning you believe that you are right. Can I suggest that the world is full of nuances, many shades of grey and different opinions, I think realising this will help you a lot in your life!
You are literally making a massive generalisation about the whole human race and saying that the SINGLE thing that differentiates us from other animals is greed and you're trying to lecture me on nuance.
Just fuck off.
This is a natural progression.
Our great grandparents (or older) went through harsh times, if they survived the first war, there was the depression.
Then the next bunch had the second war and the scarcity afterwards
Then every generation since has had increasing levels of safety, prosperity and technology. This muddies the water between what is valuable and what is not, because it's just taken as a given that life will provide all our basic needs and then some.
"Then every generation since has had increasing levels of safety, prosperity and technology"
Not true - millennials now the first generation to be poorer than their parents at the same stage of life.
Policies have thrown this generation under the bus.
Ok so they have less net worth, but a better standard of living via technology and cheap 3rd world indentured labour.
Fact is most human existence has been way grimmer, and the average person alive today isn't very conscious of that.
Interesting that it may have been 'grimmer' as you put it, and yet never has a society been so sick and unhappy.
Around the western world we are fat, lazy, diseased, unfit, anxious, depressed and suicidal.
People aren't conscious that things were 'grimmer' in the past, because they are too physically and mentally fucked up (excuse the bad language but these appeared to be the most suitably descriptive words) from trying to survive the present.
Well yeah, suicides were less during either World War than in modern times. I guess the almost constant threat of being blown up prevents people from getting lost in their own existential nightmare.
People don't have to live such shitty lives. Just lower your expectations and maybe get less choosy about what you're doing and where you're doing it.
Wars are good for morale (assuming you win).
We are now at the opposite end of that cycle - i.e. 75 odd years post WW2 and based upon historical cycles, are due another big global war. Perhaps similar for some parts of our society to how it was for many during the depression. i.e. struggling to put food on the table so have a legitimate claim to be really suffering.
Materially, even our poorest are still better off.
The suffering is usually related to why someone is poor today. Broken family, inability to work, too many dependents, mental or drug issues (or both). Is the degree of that higher today? Hard to say, but most likely today there is less support in people's lives for when it's hard.
Wealth inequality is now as bad as it was in the late 1920's, just prior to the great depression. Some have far more than they need, while many have bugger all.
So policies have favoured the 'haves' over the 'have nots' over recent decades. My fear is that we are heading back towards a 1930's experience.
That's inequality though. Relative, not actual poverty. A 2023 poor persons' house is full of a wonderment and prosperity beyond a 1923 middle class persons' wildest dreams.
We are heading towards more economic polarisation and it's not really due to policy. Capitalism dictates the proliferation of wealth, and the value of human labour has been decimated as the total labour market has become global.
If a monkey hoarded more bananas than it could eat, while most other monkeys starved, scientists would try to figure out what's wrong.
When humans do it we put them on cover of Forbes.
Exactly, and that is the single thing that differentiates us from animals: the desire to have more, in other words "greed". As I correctly stated above, that is the single reason why we are not living in caves anymore, because humans always want more, animals don't !
Apologies Yvil - this was not in support of your view - this is outlining the fault in humans' thinking and highlighting the outright greed that exists.
Will talking about all this here in this forum ever change it - nope people have their own moral compasses and it would be almost impossible to change it. However, I can make a difference by not jumping in and buying 'a few rentals' as so many people keep telling us is the right thing to do now we are mortgage free to 'get ahead'. Get ahead of who and at what cost?
There is something very very ugly with the planet at the moment and it seems the more we as a species progress the more everyone gives 0 f's about anyone else - its just saddening really.
In regard to this greed topic, it would appear to me that you are confusing your own state of consciousness with how all humans see the world.
Not all humans want more. Many can see when they have enough.
If you feel that you can never have enough, then you suffer from greed which is a human vulnerability but not necessarily a fixed trait (i.e. like a software bug that should be fixed).
OK so let me get this right, according to you the ONLY thing that differentiates us from other animals is that we are greedy. That we all have a selfish and excessive desire for more of something (such as money) than is needed.
So
1 - So when a cat eats it's food it isn't doing it because it wants it's food it's doing it because ...?
2 - If a person decides they do not want a selfish and excessive amount of something they are not human?
Seriously irredeemable human being.
Wrong Yvil. Greed is not simply wanting more. You can want more for others or want more for the planet or want more for yourself and it is not greed.
Here is the actual definition of greed: a selfish and excessive desire for more of something (such as money) than is needed
Wrong agnostium, here is the definition of greed, "Intense desire for something"
And what do you have an intense desire for?
Financial wealth?
I have an intense desire for social and financial stability so we can have happy and healthy communities and people.
And everyone's 'desires' will be different.
Hence you can't just say that everyone is greedy and then claim 'this is just how it is'.
Do you do anything with the desire or is it just a held ideal or belief? I.e. how much effort do you put into improving the financial and social stability of your community, on a regular basis?
Source?
You seem to make this kind of comment a lot Yvil - perhaps a site like money king nz would be more to your liking, if what you are after is content that's directly about financial decision making rather than general financial and economic discussion? It must get pretty tedious repeatedly reading content and comments that have little interest to you. Money King is pretty good, and also allows comments.
Yes I find it tedious, thanks for the referral, I will check out money king nz.
Yes, and societal stuff is so interlinked with the economic side of things.
Men (and women) of good character and principles can see that ethics are a crucial element financial decision making.
Those who are solely/selfishly focused on themselves and their own wealth with no care for their fellow man and women in society, will disagree.
They exist on this site.
Well said IO !
Lol, the irony in you saying that when it was clearly directed at you (and one or two others)
A true politician
Generally, the best form of business continuity is operating as a fair agent.
Unless you have some form of leverage/monopoly position.
Being both into economics and the spiritual side of life, I have often thought about the line of conversation if Adam Smith and Jesus were in the same room.
Jesus would say: 'And what do you benefit if you gain the whole world but lose your own soul? Is anything worth more than your soul?'
Adam Smith would agree and say: 'How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it'
In the end, I think that they would both agree that we must consider how our financial decisions will impact other people. What you do needs to benefit mankind, not harm it. This line of thinking is the basis of most of my comments on this site. I argue against greed that I perceive has been damaging to our society. (e.g. individuals who already have enough, buying up more properties at the expense of young FHBs - to me this is uncontrolled greed and is a sign to me of individuals who have lost their souls as Jesus put it).
One big issue is one's sphere of influence. Most people are only capable of being aware of their immediate social group and environment. If every person was cognisant of the full extent of their actions, there probably wouldn't be much of an economy.
Being more of a spiritual person than a financial one, I tend to relegate most of that sort of discussion away from a site about finance and economics. It does however guide most of my commercial activity. And ironically pay better dividends than my more self interested contemporaries.
IO "I argue against greed that I perceive has been damaging to our society."
Of course we all agree with you on this principle, but have you thought this through properly? When you want to buy anything for its best price, the item you buy is cheap because it has been manufactured in third world countries, by under paid, over worked and possibly underage workers. You too, all of us indeed, then participate in "taking advantage of others and damaging society".
You see, it's easy to accuse those who have more of greed, but very hard to admit it to those who have less!
You confuse needs with greed.
People buy consumer items at the best prices mostly as a matter of survival (i.e. they can't afford to buy anything else because of the damage globalisation has done to world economies and the items can't be sourced locally without bankrupting them).
But if I go to an auction and outbid a FHB when I don't need that property as I already own 2,3,4,5...properties, all I am doing is being greedy and selfish. I'm putting my greed (for more rental income and capital gains) above the FHB's need for the security of a place to call home.
If it were possible to buy only NZ manufactured consumer goods that weren't produced in foreign nations, I would do so. But as it stands this is not possible. So I don't have the choice (this is true for most consumer items - globalisation has done much harm in this regard).
But I have a choice as to whether I go to an auction tomorrow and outbid a FHB.
This is the difference. One is an intentional choice where there is an option to do no harm (to buy the rental property or not). The other there are no options (at least until globalisation dies and we bring back manufacturing to NZ).
"People buy consumer items at the best prices mostly as a matter of survival"
Com'on IO, you're being disingenuous and you know it! 95% of people in NZ buy stuff because they like them, not because they truely need them. Sure, we lie to ourselves to make ourselves feel better about the purchase "Oh I really needed another pair of jeans".
I'm actually surprised that you're not aware or perhaps not willing, to admit that you too, as I and anyone else, is part of the problem. We all contribute to inequality, some of us admit it, most don't !
I reiterate, please understand the difference between human needs with no viable options and people that make greedy financial decisions for their own benefit when they have the choice to do so or not. One is a matter of having no other options, the other is not.
People buy consumer items from third world countries (probably from low wage labour) because it is all that they can afford. They cannot afford superior quality items (with high input costs) nor do they have the skill or time to make their own. Therefore they have no choice but to participate in that system. e.g. clothes made in vietnam or from any other low wage economy.
Now think about other financial decisions that people make (like becoming a property investor during a housing affordability crisis). They do this for selfish financial gain (at the expense of others), not because they have no other choice. They do! They could choose not to participate. But you can't choose to not buy clothes for example.
IO, I'm coming to the conclusion that he's either being intentionally annoying or is actually a sociopath. He literally can't see further than projecting his own greed onto the whole of humanity.
On this site: a collection of people from the least greedy, least self-involved generation diagnose others with cluster B personality disorders for not agreeing with them.
I agree, what ever helps him sleep at night with the IP he owns.
Landlords godlike complex coming out.
Hey! A poor south Aucklander PI'r, who worked hard and brought a cheap house post GFC, and is now worth a million bucks, is NOT GREEDY,!,!.
This applies to 90% of kiwis.
Where did he bring his house from to South Auckland and why would he do that?
Is that a chip on your shoulder, or Slash in your Kai moana..
0r a log in your eye!
It might be to many " woodies" in you belly me thinks.
Villages bringing up babies died off with divisive minority politics, phone cameras, and the www years ago.
We live in a black v white v slim v fat v homo v hetro v LGBTYREBT+ v free speech v Google control v privacy v green v fuel v war v freedom v everything world where everything is measured and controlled by a few .
Hey look Hemi's back
6 days in and posting like a pro
Give it a week and he'll need hand therapy
Here comes the wave of Spruiks telling us about how this ‘sad’ situation will unfortunately hold house prices up etc.
These heroic investors provide homes to the needy, oh it’s so sad how we must raise rents on the unwashed masses.
If only the RBNZ would cut interest rates so these hero’s can leverage themselves into more rentals!
Good luck with that Spruiks, you may end up finding the real hero’s are the savers who end up bailing you out with an extreme haircut of course. 💣💥
Well its pretty obvious that the longer the housing downturn runs for the higher the prices will rise. Its just a continuing cycle, new builds slow, builders leave the industry, prices go up, things pickup, Opps no builders, time taken for building to resume, possible oversupply or economic changes, start again. Huge lags in the system due to building consent time and actual time to get the code of compliance, what its like 2 years ?
You're right. This time a supply crunch and population growth is going to lead to price declines and rents dropping.
You're right. This time a supply crunch and population growth is going to lead to price declines and rents dropping.
Counterintuitive. Scares people.
Nice pic.
Was talking to a owner of a large plumbing group last month. He was gloomy that he is being asked to start actually quoting work again vs. just get it done instructions. The start of the return to normal from a very abnormal period.
Well I do like that information. I hope the competition in trades continues...
Anything new house related is starting to come off, plastering, foundation work, that sort of thing.
Any half decent builder still has more to do than they know what to do with though. Some people are seeing the housing slowdown as a greenlight to do renovations or non housing construction.
Just declined a 4 unit development. I couldn't make the numbers work and trades were still cocky when asked to quote. I'll come back in a year.
Out of interest, and without giving away too much in terms of actual figures, what % increase in gross rent from the units would've made it work? Or what bps drop in rates would have made it work?
Still a decent number of consents at a level high enough historically to keep up with population growth. Consents usually dip in April so it will be interesting to see if they trend up again in May. We were never going to keep building at the very high levels of the last 2 years but if consents keep falling we could be in more trouble with net migration picking up significantly.
That was because new building regs came into effect 1st of May so everybody myself included wanted my permit issued before hand in April see what it's like in a month or two
Builders should retrain as nurses, teachers or cops - plenty of jobs out there
Or answer the phone for smaller projects.
Thank you Grant Robertson, Adrian Orr and Megan Woods.
The power team that knows how to manufacture a housing shortage in the name of affordable housing
Greg, you keep making the same flawed assumption. That houses consented will be close to equal houses built.
As I have said before, while this may generally true when the sector is booming, it’s not true when it’s plunging. The build rate relative to consenting rate will be much lower, especially at this point in the cycle.
Many of these approvals will be for applications lodged in late 2022. Many that were planned to be built will no longer be built, due to the shift in various factors over the last 6 months. Some will still start construction at some point, but it may be in 2024 or 2025, rather than 2023.
Indeed HM. People make the same mistake when talking about renewables, i.e. there has been X number of MW consented, so we're all good. Problem is you can't charge an EV off a consented windfarm, it has to actually be built first.
Here's a list of 1904 MW worth of generation where the consents have either already expired, or are due to expire within the next 24 months:
https://www.windenergy.org.nz/consented-wind-farms
All of the consents were issued over a decade ago.
So true also the push to get a permit issued before the new regs come in on 1st of May
No problems with prices according to ANZ soon they will begin rising
https://finance.yahoo.com/news/zealand-house-prices-rise-earlier-233949…
Waiting for ANZ to revise the value of our property upwards in the banking APP.
Nope, down another 2% this week.
Great chart, though it takes a minute to understand the different axis. I like the tiny uptick on the right, but these are yoy changes. So a horizontal line means changes in price in whatever direction have been the same in the last month as they were in the same two months a year ago. In this case, falling at -10% yoy.
Add to this the dwindling new mortgages, average income of buyers increasing faster than wage inflation, roll over mortgages, impending inflation via depreciation on the dollar... recession? Unsure migration will have any impact really with the border exodus going on currently.
And you should take into account the plans put forward to councils in April will be higher due to everyone wanting their permit before all the new regs that came into effect on the 1stcof May. It's all down hill now big time
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