The number of building consents issued for new homes, including apartments, fell to its lowest level for a December month since records began in 1965, Statistics New Zealand said today.
There were 994 consents for new homes in December 2010, down 26.5% from 1,353 in December 2009.
Seasonally adjusted figures show 1,018 building consents were issued for new homes, including apartments, in December, down 18.6% from 1,250 in November.
Here is the release from Statistics New Zealand:
The value of consents issued for both residential and non-residential buildings dropped in the month of December 2010, compared with December 2009, Statistics New Zealand said today.
Residential consent values fell 26 percent, to $368 million – the lowest value since early 2009. Non-residential consent valuesfell 18 percent, to $332 million.
While there was a drop in the monthly figures, in the year ended December 2010, residential consent values rose 8.9 percent compared with 2009 (but were still 11 percent below 2008). In contrast, the annual value of non-residential consents fell 17 percent (2009 had the highest value on record for a December year).
"In December 2010, consents were issued for 994 new homes including apartments," business statistics manager Louise Holmes-Oliver said. "This is the first time the number has dropped below a thousand in a December month since the series began in 1965."
Included in the consents for new homes in December 2010 were 85 new apartments (only 12 of which were assisted-living apartments associated with retirement villages), and 909 other new homes.
The seasonally adjusted number of new homes authorised, excluding apartments, fell 11 percent in December 2010, the sixth consecutive monthly fall. Including apartments, there was a seasonally adjusted fall of 19 percent, following a 7.8 percent rise in November 2010.
In Canterbury, about 30 earthquake-related consents were identified in December 2010, which included two homes. The total value of consents was $10 million.
Data for building consents is obtained each month from all territorial authorities.
Building consents - residential
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48 Comments
On the leaky schools;
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10702527
Obviously the government hasn't got a plan.... yet!
Why are consents so low? Because the developers/builder know that they can't sell them! They're in business to sell a product - houses. And if they cant' see a potential profit ,and a sale, in 12-18 months time ( the lead time to go through the whole excersise) then they won't have product to market at that time. There's no point having a shop full of goods if no one is buying them, and no point ordering next season's stuff, if this seaon's hasn't been sold yet!
It seems to me on many fronts our ministers aren’t performing to a high standard. Our property industry is just one example – bloated/ roaming wild - resulting in massive costs to the tax/ ratepayers.
Next to a number of members from other parties - I think Russell Norman makes good sense for a better and balanced NZeconomy.
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10703105
A regressive capital tax – with no tax to pay after 10 years.
Our economy needs to be structured away from the Real Estate industry into real sustainable productivity.
Considering the worldwide environment and to make progress in many regards we must select capable parliamentarians not parties and more carefully.
Not bad for a Sheetie!
It appears Russell is agin 'economic apartheid' too. Shame Labour and NACT aren't:
http://www.realeconomy.co.nz/144-capital_gains_tax_pros_and_con.aspx
Cheers, Les.
It is so screamingly obvious that it is the supply side holding up prices. The current stategy of villianising anyone for daring to invest in a property to rent out means for the next few years hardly any new built rentals will come onto the market. Sitting tenants won't dare give notice until they have been through the tortuous process of applying for 50 places before securing a new tenancy. Sure, there will be periodic surpluses in places like Blenheim, but once Wally moves out, and with him that incessant whining noise, things will pick up there as well. Meanwhile the chorus of mini IQ's will continue to sing their song "Sell me a house for 70% of the cost of building it with land and services thrown in for free." The only thing that will eventually jolt them into the reality of the situation is when they receive their third 42 notice to vacate for the year and the rental agents aren't taking new names on their waiting lists. This isn't the first, second or third time I've seen this situation recur, but it sure looks like it's going to be the most dramatic.
It is so screamingly obvious that it is the supply side holding up prices.
The only thing holding house prices at idiotic levels is the obstinate greed of those trying to sell them.
That's why few houses are selling, and then only when the vendors finally realise they have to accept realistic (ie much lower) prices.
Well Malarkey, prices wouldn't be at these levels if people weren't prepared to pay them.
Turnover may be lower than the boom times but sale prices are still strong so there isn't any need for vendor's to slash prices.
One proviso, is that Canterbury house prices will have to be viewed with caution as numerous sales of "as is, where is" property taint the median and average prices.
I already know of a house in Holmwood Rd Fendalton sold at auction in December for $950k with the double brick house included but already written off and insurance paid to the vendor. It would have normally been worth $1.4m. The two examples on my comment below are a similar situation. Percy St was probably worth $250k before the quake (now $170 which is a little optimisitc if demo isn't included), Colombo St probably $450k now $200k ono.
Judging by the lack of sales, it would appear obvious that most people aren't prepared to pay the asking prices.
The only houses selling are the ones where the seller has dropped their price to meet the market.
The bubble has been and gone, and the days of a guaranteed quick CG sale went with it.
Yes, yes, you hate that fact, we know, and you continue to pretend that the bubble is alive and well, but you're dreaming.
Judging by the lack of sales, it would appear obvious that most people aren't prepared to accept the offered prices.
The only houses selling are the ones where the buyer has raised their price to meet the market.
The bubble has been and gone, and the prices have hardly changed.
Yes, yes, you hate that fact, we know, and you continue to pretend that the market is crashing, but you're dreaming.
Ha Ha Ha so here we go again .....looking for the Chinese to save their property from collapse ...but wait till Chinese faces start popping up all over the place like mushrooms after the rain and we have :
1. One ex Mayor complaining about "bad habits" being brought to clean green Nz
2. Winston Peters complaining about turn "yellow" instead of being "Brown"
3. Elderly White ladies complaining about "Not my country anymore " et al...
Just go figure...make sure you want what you are asking for !!
Not surprising given the state of the general economy.
We are racing towards undersupply so that next housing boom may occur sooner than many think (starting within the next couple of years?).
The earthquake perhaps rendered as many as 20,000 dwellings in Canterbury to the point that they are uneconomic to repair. In addition to the 80,000? leaky dwellings nationwide that need rebuilt. At under a thousand a month, a job that will only take a decade to get back to where we are now!
The rebuilding progress in Christchurch is glacial. 2 new building consents 4 months after the event and reportedly only 7 jobs finished by Fletchers so far (out of what will be 80,000+). 7 jobs in 6 months means that they should be all done in 5,700 years!
Already we are seeing the "take the money and run" strategy in Christchurch:
http://www.realestate.co.nz/1478956
So don't expect anything like the number of buildings and houses written off to be reinstated.
On a personal note, so far we have 3 rental properties that have been written off by EQC (although no settlement with our in private insurers are even close to being made), those properties contained a total of 7 flats and 12 semi selfcontained bedsits. Two further houses have been assessed and subject to some further EQC reports and costings are likely to be written off. Another two that are likely to be written off haven't been inspected yet. On top of that four have moderate damage $50-100,000.
That's 7 out of 25 of our Christchurch buildings write offs. And a further four with substantial damage. Only four have minimal damage, the other 10 have $10-50k damage.
So that's the story of Christchurch: lots of wrecked buildings and not a lot happening. Eventually this may flow into rental demand but not at the moment. On top of the damage toll some of our minimally damaged central city properties lie vacant with zero tenant interest possibly because the usual tenants have been scared off by the quake - one 7 room multi occupancy is totally vacant for the first time since we rebuilt it 12 years ago, it is normally full on year end leases in January but at present no one has signed up.
With building damage, insipid rental demand and a disastrous economy, it's hard to fathom quite whats going on.
The only bright lights on the horizon are cash insurance payouts (which most likely will go to pay off the mortgage without bothering to rebuild).
Chris - what do you term "another boom"
I doubt we will see another boom for a long time (I'm assuming by boom you mean upwards of 10% growth in values per annum)
As I've said before, prices realistically can't grow much more than incomes from here as mortgage serviceability is generally stretched to the max.
@SK: Two point from Chris_J's post at 12.11 pm for you, (and he's on your side!)
(1)"The earthquake perhaps rendered as many as 20,000 dwellings in Canterbury to the point that they are uneconomic to repair. In addition to the 80,000? leaky dwellings nationwide that need rebuilt." Answer: They won't be repaired or rebuilt. They will just be sold, as is, at a lower price, some to 'optomisitic repairers' in the hope of making a quick buck. The rest will compete with 'living' houses at a lower price, dragging down the price of those sounder houses, ( would you pay 100% for one of the suckers?) and...
(2) "Already we are seeing the "take the money and run" strategy in Christchurch". Of course! And what do they leave Christchurch with? Very little, certainly not what they had to buy anywhere else.... say Auckland. And why would they go there,? I mean, why go from a 'safe' unknown earthquake zone to live on a volcano field! Those traumatised by the 'quake will find much better alternatives to living in New Zealand. Psychologically and monetarily. And just like 'the leakies' dragging down Auckland prices, so will the lower prices that are emerging in...Christchurch.
It's totally relevant!, SK You will care when the house you are trying to sell is competing against a "leaky or a 'quaked" for a deal. Whether you own one or not, it's value will effect your property. Even if it's just the capacity to re-finance it, come roll-over time. And as far as 'consents are down'. What do you think is going to happen the second that the market looks like it's bottomed? That's right....the mass builders are all going to build en-mass. That's a huge supply yet to come to market at some indeterminant time in the future. After all; they will have a profit catch up to do! And given that the market will then be awash with 'new builds', what do you think that will do to the market price of 'leakies and 'quakies'? Yep! Push them down, further...It's an economic circle of life thing....
Are you having a laugh?
A non damaged house is more sought after than a damaged house.
The effect of having a large chunk of damaged houses in the market - is that the undamaged houses have a higher desirablity attached = worth more - not less.
Are you honestly going to argue with this?
@SK;Muzza : I don't have to argue with it, I see it happening, today, in Auckland and Christchurch ( read Chris_J's post above. He's been 'in the business, full time for 30+ years, and unlike most ameteur developers/speculators, knows what he is talking about.) Then, both ask yourselves: If I see a 'leaky' house selling at 50% of the value of a 'goody', and I think I can fix it up for another 30% over cost, what will I do? My suggestion to you is that you will buy the 'leaky' and look to make a return, and leave the 'goody' on the market. What happens to the prices? The good one will fall, if it wants to sell, and the defective house will rise; and if the 'leaky' isn't discounted enough to attract a buyer, it will not sell either! That's how it works, and where whatever work there is for our builders will come from..
NA, actually I'm not as old as that!
I've followed real estate markets since the late 80s, been involved since the mid 90s and full time since early 2002 when I could see the writing on the wall for the coming boom and left my job as a fund manager analyst.
So far history has showed that leaky homes are pariahs and earthquake damage will likely be the same (especially those with significant land damage). Unfortunately the unknown costs associated with renovation mean that even homes where only modest repairs are required are discounted almost to land value. There are opportunities for fixer uppers but because of the scale and standard of repairs required few are actually interested in buying.
Ironically these houses can be perfectly rentable and liveable and may therefore give some spectacular returns to brave investors who gamble that they might get 10 or 20 years use of the property before major defects show up. But it's probably a risk few banks would want to be involved with and even fewer investors, hence the fair price for these types of properties being land value.
As the defects continue to appear with time, I suspect the desirability and price of sound property will appreciate more than it otherwise would.
The figures are abysmal and point to two key matters.
Firstly, building consent figures reflect the general health of the residential sector. Bulls shouldn't get too exicted about the supply limiting effects of these stats, because they fundamentally arise because of the poor current and projected performance of housing ie. if people expect prices to soar again then they would be building a lot more. At the moment, people expect prices to level out or drop. I think it was Rodney Dickens who has a successful method of predicting house price movements based on building activity.
Secondly, the bears shouldn't get too excited as continued low acitvity will eventually exert inflationary pressure on house prices. However, with low immigration and a still sick economy I wouldn't expect such pressures to really be realised for another 2 years or so at least.
So what does this all mean? NZ prices likely to fall a further 3-4% over the next year or two, Auckland to hover around no increases (maybe a small drop or rise either side of zero).
Come 2013 we would have reached the bottom, its probably going to be equivalent to a 20% drop in real prices relative to 2007
Stands to reason, the cost of building hasn't come back like all the non home owners would like, even all the propaganda about the so called property bubble aint going to reduce the cost of building so building aint going to pick up until property prices pick up to the level that makes building a viable alternative, love it
Did anyone actually look at the graphs? For some regions the graphs are up and down every month and not much can be said. For the last two years, the "NZ Total" graph seems to show roughly stable consent numbers of about 1100 per month, with fluctuations (as is usual), and bigger dips in Dec/Jan. Not as many consents as pre-boom times, for sure.
The headline is mischievous and misleading (c'mon guys!). Based on a statistic for a single month, it implies something much more drastic is occurring. If there were record lows for three months in a row, then that would be newsworthy. But we all know the graph will rebound and bounce around a bit.
This type of headline used to be called "sensationalizing" when I was at school. But with 35+ comments, it does its job ... "Number of Building Consents Attains Seasonal Low as NZ winds down for the Christmas/New Year Holidays, and This Comes off Already Low Levels" might be a better description, but wouldn't get any comments, would it?
"Stable" at 1100 (although I'd call it "bouncing around 1100"!) for the past 2 years is exceptionally low both over the recent and slightly distant past.
Levels hovered around 1500 during the last slump 1999-2002. Rose to around 2500 during the early part of the boom before settling around 2000 at the later part of the last boom.
40 years ago the numbers were about 3000.
That's why below 1000 is so spectacularly bad.
Medical professionals like to talk in terms that everyone can clearly understand. One of terms that they use comes to mind. Motorcyclist Versus Truck. This is when something very fragile, a human sitting atop a speeding piece of shiny metal & rubber comes in contact with something very hard, tough & immovable. A Truck. The outcome is very often a very badly damaged, if not critically injured human.
The New Zealand economy seems to me to be heading for a very similar unhappy outcome. The latest building consent figures paint a picture of an industry in a state of extreme contraction. Forget for a moment the medium term impact of this, ie: a shortage of residential housing stock. Consider the immediate impact.
a) Idle Builders, Idle building materials suppliers, Idle machinery drivers, Idle mechanics.
b) Reduced income for council planning departments, Idle quantity surveyors, Idle architects
c) Reduced economic activity, Idle shop-keepers, Idle lunch bar owners
d) Higher government borrowings to pay the benefit to all those badly impacted
Quite clearly 'The Market' for new housing stock has dried up. This is because the market for already completed housing stock is far from healthy.
The economy of New Zealand is undergoing renewal. Traditional export earners such as milk powder, wool etc are pulling the rest of the economy behind them. Dairy & Sheep Farmers can barely get their product to market fast enough.
On the other hand the fallout from the decade long property bubble is like a millstone around the country's neck.
The government needs to get in behind the primary producers & give them the support they deserve. They will be the export earners of the future. On the other hand the property bubble has been highly destructive to the economy. Much of the borrowings in New Zealand over the last decade has been squandered on non productive assets. All that we have to show for these borrowings is a big-fat-bubble.
It is time to prick this bubble. Residential Property investors should be targeted & their destructive parasitic profiteering punished. It's time this dog was put down.
New Zealand's greatest asset is its clean green image & its ability to produce fantastic lamb, wood-products, wool & dairy products. Our tourism could also be much stronger. Lets get back to basics & put the ponzi property sector to the sword.
The collpase of the property sector is on....this will drive the nails into the pinus rhubarb coffin:
"New Zealand's "brain drain" of skilled workers across the Tasman looks set to worsen as big Australian companies arrive in Auckland offering "fantastic job opportunities and lifestyles".
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10703303
Last one to leave turn off the lights.!
I would like to build on my two sections but the sums do not add up and wont until prices move up, that must be the same for many section owners. Also, is it a problem with finance now that the Finance Companies are gone and the banks see the same maths as I am seeing?
So your break even gets further away each day, keriwin. As the capital costs ( interst paid or foregone),rates and mower costs just eat into any future gains. How long do you hold it until your think "Bugger. I wish I'd sold it back in '11". That's if you can.....You are just seeing what all other property holders are going to see from hereon in.
Keriwin. I find it hard to believe that even with free land the sums still don't add up. That's a pretty scary comment, especially for those that bought land in Northland with the intention of holding then selling at a profit. What you are effectively saying is the land is currently worth nothing.
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