Home renovation activity starting to slide but costs keep rising

Property / news

The volume of home renovation work is down but costs are up

8th Jul 23, 6:53am by Greg Ninness

As the housing market cools, so too it seems is New Zealanders' love for home renovations.

According to Statistics NZ, building consents were issued for 2648 dwelling alterations in May, down 8.2% compared to May last year.

A building consent is not required for mere redecoration work, such as repainting or installing new cabinetry.

But it is required for most structural alteration work such as removing walls or adding a room to an existing dwelling.

The decline in the number of alteration consents issued in May compared to a year earlier was evident in all main centres. The biggest decline of -19% was in the Bay of Plenty, followed by Wellington -17.5%, Auckland -14.4%, Otago -8.8%, Waikato -7.4% and Canterbury -5%.

The monthly figures show that the number of alteration consents issued nationally peaked in May last year and then gradually declined, as mortgage interest rates rose and the housing market cooled.

In the 12 months to the end of May this year, 24,684 consents were issued nationally for dwelling alterations. That's down 8.4% compared to the previous 12 months.

However the total value of that building work actually increased marginally over the same period, from $2.207 billion in the 12 months to May last year to $2.264 billion in the 12 months to May this year, an increase of of $55.6 million (+2.5%).

That's because the average value of the building work involved has continued to increase, rising from $81,929 per consent over the 12 months to to May 2022 to $91,711 over the 12 months to May 2023. That's up by almost $10,000 per consent (+11.9%).

On an annual basis (12 months to May), both the total value of residential alteration work consented and the average value per consent remained at record highs, in spite of the recent decline in consent numbers.

Although the amount of home renovation work being undertaken may have declined over the last year or so, New Zealanders' passion for doing up their homes remains strong, with the latest consent numbers still ahead of where they were pre-pandemic.

The 24,684 residential alteration consents issued in the 12 months to May this year were up 5.3% compared to pre-pandemic levels in the 12 months to May 2019.

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54 Comments

by Retired-Poppy | 8th Jul 23, 7:29am 1688758167

With home improvement stores currently having footprints on a scale geared to the booming market of yesteryear, what could possibly go wrong?

by Pa1nter | 8th Jul 23, 7:34am 1688758477

Huge amount of their sales are for items and customers doing non consenting work.

But you double down on that sentiment and short Bunnings stocks or something.

by Retired-Poppy | 8th Jul 23, 7:42am 1688758953

"Huge amount of their sales are for items and customers doing non consenting work"

Can you quantify - what %? What is your point regards non consented vs consented?

by Pa1nter | 8th Jul 23, 7:58am 1688759938

Most (all) consented work is carried out by tradies. Trades will generally buy most of their materials from a trade store (so think Plumbing World, Carter's, ITM, that sort of thing), and just odds and sods from the likes of Bunnings. Usually due to a combo of pricing, and much of Bunnings' items aren't something a professional would want to bolt into a property.

Don't have a percentage there, but a good guide would be to walk through a store and ask yourself how much of the shelves are aimed at the home user rather than a tradie.

I'd say some trade merchants will be encountering a decent drop off though.

by Flying high | 8th Jul 23, 1:57pm 1688781427

We may be able to find a helpful staff member in the cavernous bunnings store... except staff numbers are being sliced as profits drop

by ikimpaul | 8th Jul 23, 2:35pm 1688783742

Home improvement stores usually do better in recessions as people do jobs around the house rather than paying for someone to relandscape or paint etc.

Both burnings and Mega grew and attained their current glory during the GFC ie between 2008- 2012

by Flying high | 8th Jul 23, 10:25pm 1688811914

You dont suppose that retired poppy could be wrong

by Retired-Poppy | 9th Jul 23, 7:19am 1688843961

Considering how many jobs are at stake, I certainly hope so. In 2020, due to the COVID related downturn, Bunnings closed seven stores; https://www.rnz.co.nz/news/business/418139/bunnings-warehouse-confirms-…

Now that the worst of COVID is behind us, were these stores reopened?

This space is now very crowded. Is Home Improvement Retailing really recession proof?

by IT GUY | 8th Jul 23, 7:38am 1688758683

I got some Resene paint yesterday (Stables where half painted, I don't normally buy Resene) Shop was empty and the guy said things were slow, winter, slow down and all the rain in AKL.

by Zachary Smith | 8th Jul 23, 8:11am 1688760708

Auckland only has about 6 weeks a year of ideal painting weather.

by Baywatch | 8th Jul 23, 8:35am 1688762153

Just Auckland...??

by Advisor | 8th Jul 23, 8:32am 1688761928

A recent survey shows food retailers are witnessing a decent run but non-food retailers are tightly squeezed between high input costs and low sales volumes.

by ikimpaul | 8th Jul 23, 2:32pm 1688783545

I'm shocked are you saying grocery stores are recession proof. I wonder why that is.

by dbbr | 9th Jul 23, 8:44am 1688849041

by Thats All Folks | 8th Jul 23, 7:55am 1688759700

Zwifter and Harvey will be along shortly to let us know that the bottom is just around the corner.

bE qUiCk oR yOu wILL mISS tHe bOuNCe!

by Advisor | 8th Jul 23, 8:21am 1688761301

63% of retailers expected to increase their prices again within the next three months, while 60% of retailers had already increased prices in the past three months

Inflation is alive and kicking [everyone in the guts]!

by Zwifter | 8th Jul 23, 11:55am 1688774120

Agreed, confirmation is just days away now, put the 12th in your diary.

by Harvey W | 8th Jul 23, 12:44pm 1688777087

The bottom is already here! Prices rising by the end of the year🙂

by IT GUY | 8th Jul 23, 6:59pm 1688799584

You are running out of months Harvey, after that you will have to come back with a new login and Spruik as if you know what's going to happen....... by then you may have solvency issues..... as will many of the forced sellers that will make 2024 look as bad as 1987 equities looked

by nguturoa | 8th Jul 23, 8:05am 1688760318

It's not really home renovations for 90% of the houses.

It's the greedy ones buying a crap at an elevated price and then doing it up to sell that crap at a much higher elevated price. And in the process fooling a few fellow kiwis.

A donkey with a lipstick remains a donkey.

by Pa1nter | 8th Jul 23, 8:09am 1688760587

Actually most renovations end up being financially detrimental, and people would've made better returns doing nothing.

by HughJorgan | 8th Jul 23, 9:11am 1688764270

Agree. Two friends renovated at a cost of >$1m five years ago added little. In both cases they would have been better changing properties.

Often it’s just not efficient / economic to renovate.

by Pa1nter | 8th Jul 23, 9:07am 1688764044

Yep, by the time you:

- get an architect/engineer to design something

- pay the council to consent it (and have them require additional work than your architect planned on)

- have the work done/signed off

You can spend hundreds of thousands not going anywhere. It's mostly a vanity project, and they don't pay off well.

by Juzz | 8th Jul 23, 9:47am 1688766478

Almost 100% agree with that, there are some minor Reno works however that can add more value than they cost. In saying that if Reno is not planned and finished to a tradesperson like standard then it's likely an exercise in futility

by Pa1nter | 8th Jul 23, 10:09am 1688767799

If it's something that doesn't require consent (so usually cosmetic) then yeah if done right can be decent bang for buck.

But then that often involves kitchens and bathrooms, in which case break out the money printer.

by Zwifter | 8th Jul 23, 11:57am 1688774276

Yep you are looking at new paint and new carpet or you are better off just selling and finding the right place.

by James Thrace | 8th Jul 23, 6:34pm 1688798046

There is a difference between renovation and addition. Additions will generally require consent. Most renovations will not unless you’re moving a toilet from one side to the other. So much renovations can be classified as repair/replacement where it is like for like and the replaced component has exceeded its code requirement eg is older than 30 years for cladding. A reclad with the same product doesn’t require consent, unless you’re in Auckland but as that is only local body bylaws requirement it could be open to challenge.

by nigelh | 8th Jul 23, 9:13am 1688764409

Tend to agree with you but renos make for a comfort feeling that one has something nice, new and more convenient in a modern bathroom and kitchen, even in a home that is only 40-50 years old. So its not just financial reasons that renos are done.

by upquark | 8th Jul 23, 10:49am 1688770176

I have a relative who added a self contained flat for an ageing parent. When the parent passed away they had a home and income. Great selling point if they ever sold.

by Zwifter | 8th Jul 23, 12:01pm 1688774480

Like anything else its only worth the extra money to someone who is interested in that feature. If its costing you hundreds of thousands to make that change then that's a lot of "Rent" to get back before you even break even.

by Yvil | 8th Jul 23, 2:09pm 1688782189

Some great comments here. I agree, very often a reno blows its budget and is rarely economically worthwhile. Then again, it's also true that the owners get a degree of satisfaction which is not quatifiable by $.

One of the main problems with renovations, is that you often have to update other parts, to the latest building code. Example, anything non-compliant with today's building code does not need to be updated… until you apply for a building consent to renovate, then it has to comply. This opens a (often unexpected) can of worms and often blows the budget. (I had my own architectural practice for 18 years, I disliked doing renos because they are so difficult to price)

by Eschaton | 10th Jul 23, 8:56am 1688936165

Don't agree, especally nowdays when most houses going up are cookie cutter townhouse stuff.

Often when price is discussed its without consuderation of improvements done over the last 30 years.

Of course building costs are prohibitive nowdays but more often than not home improvement is worthwhile. If for nothing else than improved quality of life.

by Zachary Smith | 8th Jul 23, 8:14am 1688760868

Such a downer comment nguturoa. People buying poorly maintained houses and renovating them is a good thing surely?

by Pa1nter | 8th Jul 23, 8:17am 1688761031

They'd make a great motivational speaker.

"Hey everyone, you're all bad and your life is a meaningless exercise in organic decay.

Remember to put on a happy face!"

by Retired-Poppy | 8th Jul 23, 8:22am 1688761343

Pa1nter, which one are you - "Statler or Waldorf"?

by Pa1nter | 8th Jul 23, 8:27am 1688761676

I'm Animal. Quit your moaning and check out this sweet drum solo.

by Retired-Poppy | 8th Jul 23, 8:33am 1688762005

Statler it is then....

by Pa1nter | 8th Jul 23, 8:56am 1688763392

I spose I am to your repertoire of hot takes

by nguturoa | 8th Jul 23, 8:25am 1688761522

😁😊😁.

I am happy, just try to put in words as to how I see it. I don't see any good in how the society is moving forward in the country.

Did I really say something which is beyond truth? I don't think so but if some think so, I do I apologise to them.

by Pa1nter | 8th Jul 23, 8:26am 1688761589

I've met very few people that adopt such a negatively geared outlook that are full of much joy. It's like a preacher who waxes about sinners and hell and tarnation, who's usually living a life of more debauchery than the congregation.

by Solid_Granite | 8th Jul 23, 9:57am 1688767046

Sounds like Christians talking about global warming scientists.

by Yvil | 8th Jul 23, 2:04pm 1688781886

"I don't see any good in how the society is moving forward in the country."

These are your words, can you see how that doesn't sound like "I am happy" ?

by Yvil | 8th Jul 23, 1:51pm 1688781088

Nguturoa: "It's the greedy ones buying a crap at an elevated price and then doing it up to sell that crap at a much higher elevated price. And in the process fooling a few fellow kiwis. A donkey with a lipstick remains a donkey."

I do hope you will find some peace and happiness within yourself this weekend.

by HughJorgan | 8th Jul 23, 8:51am 1688763115

Have noticed this in a northern beach suburb. New builds are just being completed, no new foundations in quite a while. 3 decent renovations kicked off and probably have 3 months to go.

by nigelh | 8th Jul 23, 9:02am 1688763769

No numbers on Taranaki building consents. About to embark on a bathroom reno with an second toilet. Not with standing I'd use a registered plumber for the toilet, I was surprised to learn from the plumber on a recently completed other job that I needed a building consent.

I'm not sure that any tradie, particularly builders, are concerned with work drying up and the claimed slow down in construction of new builds in Akl is debatable if renos and the house repairs from flooding keep work going. Maybe they've only got six months worth of work instead of the nine months to a year or more.

by HughJorgan | 8th Jul 23, 9:20am 1688764818

Fixing stuff using insurance money is fine.

Without capital gains to make you whole most other work is uneconomic. Add a bed/ensuite, say 7x4m at $6k = $130k + design + consents and then finance it at 7%…. it gets pretty pricey.

Builders are not going to be kept busy for long fixing things.

by IT GUY | 8th Jul 23, 10:49am 1688770160

Its so expensive to do any Major Reno that it's just not viable in the falling market, if you think you may move soon.

by Yvil | 8th Jul 23, 1:56pm 1688781413

One of the main problems with renovations, is that you do have to update other parts, to the latest building code. Example, anything non-compliant with today's building code does not need to be updated… until you apply for a building consent to renovate, then it has to comply. This opens a (often unexpected) can of worms and often blows the budget.

by CrispyKahawai | 9th Jul 23, 9:10am 1688850611

How far-reaching is this? e.g. if one wished to add an extra external dwelling, and happened to have an unconsented project in the main house, would that suddenly need to be sorted?

by Pragmatist | 9th Jul 23, 6:20pm 1688883623

You're confusing unconsented and non-compliant. The things Yvil is talking about are things that were consented (or did not need it) back when they were done, but don't reach the standard of modern building code. Eg, old house with non-updated switchboards, you can't change anything about them until the switchboard is ripped out and replaced with a modern switchboard with RCDs and MCBs etc.

by DIYman | 10th Jul 23, 6:41am 1688928078

If the two are not physically connected, there is no issue, unless the first one happens to be built over or too close to a boundary

by DIYman | 10th Jul 23, 6:39am 1688927949

100% correct.

We started a renovation, last year, and we were going to do some work on the roof, move a couple of walls, put in new windows and doors, and now we have demolished everything except the letter box at the gate, new foundations, everything and the only difference between a new house consent and our alteration is we dont have to have a water tank. It is approved as a consent for an alterations, I imagine we are in the renovation statistics, but it will be a new house. Some things like the sewer line, and the stormwater lines were replaced after the EQ, so they are being re used, but nothing else

by Noncents | 8th Jul 23, 3:26pm 1688786802

We gave up on the exact same reno in New Plymouth. Four tradies came to view and quote. Only received a single quote and that was clearly a f-off price. The other three we never heard back from. One called back 3 months later to apologise for the delay and asked if we still wanted a quote.

Plan now is to wait it out, there is clearly still a big backlog of work in New Plymouth, but we are not in a rush.

by highvoltage | 8th Jul 23, 8:22pm 1688804524

Waiting it out to get a cheaper builder is one option but don’t forget how much the cost of materials and all the other stuff is going up. The value of your kiwi pesos is dropping every day.