Latest consent data suggests the value of residential construction work declined by $3.69 billion in February year

Property / news

New dwelling consents declined by a quarter in the year to February, Statistics NZ says

4th Apr 24, 4:53pm by Greg Ninness

The number of new homes consented in the year to February was down by a quarter compared to the previous 12 months, with consents for apartments and retirement village units suffering particularly steep declines.

According to Statistics NZ, 36,276 new dwellings were consented in the 12 months to February this year, down 24.8% compared to the previous 12 months, and down 27.2% compared to the year to February 2022.

The downturn affected all dwelling types, with 16,690 townhouses and home units consented in the year to February, down 16.9% on the previous 12 months, followed by 15,501 stand alone house (-24.0%), 2291 apartments (-49.2%) and 1794 retirement village units (-45.3%).

The total value of the new dwelling work consented dropped from $19.93 billion in the year to February 2023 to $16.22 billion in the year to February 2024, a decline of $3.71 billion (-18.6%) for the year.

However the amount of structural alteration work consented for existing dwellings managed to hold its head above water, but only just.

$2.494 billion of structural alterations to dwellings were consented in the year to February, up $18 million (+0.7%) compared to the previous 12 months.

That took the total value of residential construction work consented in the year to February to $18.714 billion, down by $3.69 billion (-16.5%) compared to the previous 12 months.

Non-residential construction, which includes commercial premises, such as shops, offices and factories, as well as non-commercial buildings such as hospitals and schools, has proved more resilient, with $9.907 billion of non-residential construction consented in the year to February, up 3% compared to the previous 12 months.

However that may mask some underlying weakness in non-residential construction because the total floor area of non-residential work consented was down 8.1% in the year to February, following a 9.0% decline the previous year.

That may suggest the actual amount of non-residential work being undertaken is in decline but inflation is maintaining the total value of that work.

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15 Comments

by Black and White | 4th Apr 24, 9:58pm 1712221120

Just too costly to build.

Everyone I know in the commercial space is stoping

Residential dead in the water.

Major correction about to happen

by Final Account | 5th Apr 24, 3:26pm 1712283986

Commercial Main Contractor - our 2024 is set to rival 2022 turnover wise. 2023 was a fizzer. Multiple suppliers rates pulling back and project costs and m2 rates decreasing.

If you wanted a deal in commercial land the time was 9-12 months ago. Council's will trip you up now if you're trying to get in.

We are hiring site managers and QS's everywhere South of the Bombay's.

Won't make a difference to the national bottom line but happy here.

by Property Leader | 5th Apr 24, 12:18pm 1712272716

I would love to read an article on what needs to change reverse this trend. Clearly many people think we need more dwellings and in particular rental housing provided in all its forms and locations by the private market. The State has proven to not be good at providing rental housing.

I think the green light will go on once it is cheaper to build new rather than buy existing.

by Pragmatist | 5th Apr 24, 12:44pm 1712274289

But how do we get to the point of it being cheaper to build new than to buy existing? is the labour cost going to come down? The materials? or the regulatory/compliance and infrastructure costs going to come down? (I don't see any of those plummeting soon, material may decrease a bit with the proposed regulatory changes)

Or is the price of existing places (land price mostly) going to increase till development makes sense?

by Makara | 5th Apr 24, 5:15pm 1712290507

First we need to do away with this moronic theory that the economy should be controlled by interest rates set by central bankers. That seems to only result in boom and bust which is very destructive to the economy.

Replace it with:

- Coherent and PREDICTABLE immigration settings

- Government monitoring of competition and taking all actions to break up monopolies and cartel like behaviour

- Government “picking winners” and investing in them based on a NZ Inc Economic Plan.

- Government properly funding and implementing infrastructure BEFORE there are problems.

This would put responsibility back on the democratically elected government whose performance could be assessed accordingly.

by wingman | 5th Apr 24, 5:43pm 1712292235

Isn't that what's called communism? Gubbermints are the worst investors on the planet.

by NZGecko | 5th Apr 24, 2:20pm 1712280002

As has happened before, an explosive reset, recession/depression - will have new much lower expectations and pricing emerge. An explosion financially must occur.

The current Govt are intent on cutting regulations and next will be building standards. Mark these words!

We are NOT a rich Nation and cannot afford the champagne lifestyle/buildings that rich half of Europe indulge themselves with.

Simple, One thick pane of glass and 2 to 3 blankets on your bed.

by Makara | 5th Apr 24, 5:18pm 1712290709

Bollocks.

High quality buildings would have been affordable if we hadn’t treated land and property development like some sort of casino operation.

Most builds in 1980s and before were good quality reflecting the more affordable prices paid for land.

by wingman | 5th Apr 24, 6:34pm 1712295262

"Most builds in the 1980's and before were good quality?"

Flooding in basements, little or no insulation, wooden window frames that let the breeze in. No thanks.

Been there, done that....... they were rubbish. And not forgetting the leaking house crisis.

by wingman | 5th Apr 24, 5:33pm 1712291609

Drop in dwelling consents......more immigration......less houses = Existing houses prices on the way up. Right?

by Cote d'Azur | 5th Apr 24, 5:53pm 1712292817

And interest rates about to fall away rapidly 🥂🚀

by NZGecko | 5th Apr 24, 7:11pm 1712297514

I don't think you are watching! Unless you too, see a massive recession getting deeper, or worse?

Inflation about to roar anew.

Higher for longer, has become Just Higher - interest rates.

by Chris-M | 6th Apr 24, 9:54am 1712350488

Immigration going through the roof and house construction crashing = a lot of families sleeping on the streets even hard working ones with double incomes. If there are not enough houses, all the income will not be much use. All the factors that will lead to this outcome are in place now. I suspect that it is pretty unavoidable at this stage. They are going to have fun explaining this at the next election. About 2 and a half years away now. My how time flies.

I see in this morning's Herald that Mathew Hooton shares my view that we are destined to economically collapse into a basket case like Argentina. There are significant similarities. Young Kiwis, your best hope is to leave NZ.

by wingman | 6th Apr 24, 8:25am 1712345156

Most economic predictions never happen. Hooton can speculate all he likes but the chances of it actually occurring are close to zero.

It could happen if another Labour Govt. are elected and carry out their promises to 'cleanse' the airline, farming and tourism industries, our major earners.

by Chris-M | 6th Apr 24, 12:25pm 1712359541

"...rarely happen" "...close to zero" Given the consequences, (look carefully at Argentina) are you happy with those odds?

https://hir.harvard.edu/argentinas-economic-downfall-which-party-will-s…

Some of the circumstances obviously differ, but there are some disturbing similarities between the path we are on and what happened in Argentina. At one stage, Argentina enjoyed one of the best economies in the world on the back of agriculture. Not so much now!!!

The extremely polarized politics that helped destroyed Argentina are now playing out in NZ (and a few other places also). You may not want the Labor government back in power (given their previous past performance, who would?), but given this current governments violent swing to the right, they look like being equally irresponsible and If one thing is certain, the way they are going, they will return power back into the hands of the previous regime, and all things that you fear. And so on. Idiot government to the left and idiot government to the right. Ping Pong governance that will increasingly polarize the country and push us towards an Argentina like outcome.