Building consents issued nationwide for new houses fell 4.5% to 965 in June from May in seasonally adjusted terms after three months of rises, figures released by Statistics New Zealand show.
Despite this, the trend in new homes being consented, excluding apartment units, continued to indicate a gradual rise, although Stats NZ said it was still not possible to confirm whether this was a consistent upward movement.
Including the volatile apartment unit category, building consents for new dwellings fell 1.4% to 1,031 seasonally adjusted in June from May.
“As we saw in the May figures, when apartments are excluded, the longer-term trend shows a small increase in homes authorised recently,” Stats NZ industry and labour statistics manager Louise Holmes-Oliver said in a release.
“However, while the trend has certainly flattened after a year of decline, it is still not possible to confirm if it has started to rise – at least one more month of positive movement would be necessary,” she said.
Unadjusted annual figures for all dwellings showed 995 consents issued in June, down 27.5% from 1,373 in June 2010. Excluding apartments, there were 935 home building consents in June 2011, down 29% from 1,316 the same month a year ago.
In the year ended June, building consents, including apartment units, issued over those 12 months were down 16.3% from the June 2010 year, while excluding apartments, home building consents were down 18.6% from the previous year.
Economist reaction:
Here's ASB economist Jane Turner's take on the figures:
Dwelling consents remained extremely weak in June, with the decline in consent numbers due to lower consent issuance in Canterbury. Total dwelling consents issued fell 1.4%, led by a 4.5% decline in ex-apartment consents. Looking at the regional break down, consents issued in Canterbury dropped sharply in June, to around half of the level of normal monthly consent issuance (according to ASB’s seasonally adjusted estimates). This is probably due to the large earthquakes inChristchurch during early June which potentially put repair plans on hold while households waited to assess the damage.
StatsNZ note earthquake-related consents have started to trickle through. In June, $14 million of earthquake-related consents were issued, including $8 million non-residential consents and $6 million residential consents, including 8 new dwellings. Nonetheless, the number of consents issued remains extremely low and has yet to pick up in a meaningful sense. We expect residential repair work and construction of replacement housing will begin in early 2012. Given this, we expect to see a pick-up in consent issuance towards the final months of the year.
Excluding Christchurch, dwelling consent issuance remained stable, albeit at subdued levels. While overall building demand is currently very low, increasing tightness in the housing supply (particularly in Auckland) will help stimulate an increase in underlying demand for housing construction over the coming year.
Non-residential consents
Consent issuance for non-residential buildings was soft in June, with declines across a broad range of categories including retail outlets and hotels. This result follows some pick-up in issuance in the previous month. Overall, the level of non-residential consent issuance suggests a weak outlook for non-residential construction over the coming year. For the year to June 2011, the value of non-residential consents is down 4.3% on a year ago.
Business confidence surveys points to a rebound in commercial construction intentions in recent months. This rebound likely reflects the substantial amount of post-earthquake rebuilding required. We expect rebuilding activity will pick up pace over 2012, thus underpinning a recovery in construction activity.
Implications
Consent issuance remained very subdued over the first half of 2011, and point to ongoing weakness in construction activity in the coming months. Over the coming year, we expect repair and replacement of housing in Christchurch to underpin a steady increase in construction activity. However, this activity is unlikely to start until seismic activity has settled down. The strong earthquakes in early June highlight the ongoing challenges and uncertainties the region faces, and suggests it will be early 2012 before we start to see a meaningful increase in reconstruction activity.
On top of the Christchurch reconstruction activity, we expect to see a pick up in underlying demand for housing construction throughout the rest of the country. While construction activity remains extremely weak for now, the challenge over the coming years will be the ability of supply to meet demand within the sector.
(Updates with ASB reaction, Stats NZ quote, annual figures)
Building consents - residential
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12 Comments
The rising rates will expose the naked building sector....you can't build on credit....if Bollard continues his near zirp madness, he only reinforces the weakness in the building sector. It will be long term consistent saving that will lead to growth.
Sadly saving is actively discouraged in this economy. You lose on the debasement and you pay tax on the loss as well....it really is a giant scam.
If, decades ago, rates had been kept high..the culture of saving would be firmly entrenched and the banks would be lending to other nations. The farms would be reaping all of the commodity gains. Investment into new export business sectors would come from the savings. Unemployment would be rare. Govt revenue would always lead to surplus. Taxes would be low. Immigration would be restricted. Per capita incomes would be way ahead of those across the ditch...what a bitch!
No surprise.
How is it economists tell us the economy is booming?
Exporters are struggling, tourism is weak, farmers aren't much better and ChCh businesses are generally in despair.
Given that this is the one economic number that is 100% accurate, and it's nearly 30% worse than a year ago, that is a fair measure of how the economy is doing overall - abysmally.
But the economy must be booming.
Growth in Rich Listers' wealth defies global slump
Proof, if it was needed, that the country is sailing out of the economic doldrums comes with today's NBR Rich List for 2011.
The combined wealth of its 151 entrants has climbed a pleasing $7 billion from last year to sit at $45.2 billion, the highest ever.
As NBR marks 25 years of the Rich List, the wealth creators we celebrate today are doing well and that's vital for a successful New Zealand future.
Alongside the established old family money and commercial risk takers of recent years, we are pleased to recognise new faces.
This is further evidence of the trend in New Zealand to buck global economic despondency and fiscal naysayers.
And from the horses mouth (Dominick Stephens - Westpac economist) on a live chat at NZ Herald.
Comment From Lakshmi NairLakshmi Nair: ] During a recent holiday overseas, we found that home loan interest rates in Canada/US are @3%. The houses in NZ are overpriced any way(construction costs much higher than in Australia) and with the proposed mortgage rates increase, is it not going to be even harder for first home buyer?
Dominick Stephens:
Yes, I do think NZ house prices are high relative to incomes and over the next few years I expect that to correct - probably via flat house prices and slowly rising incomes.
It is not just new housing costs because they can adjust by floor area downsize if necessary.
More important is the ability to service borrowing compared to income and that will not change except by inflation.
So if vendors want to sell they will have to accept the price offered. Hence the flat (or dare we say lower) pricing. After any rise in Auckland even those prices will ultimately fall into line because more people will depart fromAuckland or find it too costly to come to live there.
Ostriches don't "neigh", they......"awwwwk" ?
ChrisJ I'm with you - the building stats are abysmal, they are usually a good yardstick for the economy. I think there is an awful lot of spin being trotted out at the moment, as an "opiate for the masses" in election year. It does surprise me that we haven't seen more business failures and higher unemployment. Unemployment is probably being assisted by the high emmigration / low immigration happening at present
In "our" new land MIA ! "It is the month on month change in Housing Credit. This Month’s growth rate of 0.3% is the lowest since 1984!"
From your link, for Australia:
Over the year to June, housing credit rose by 6.0 per cent.
NZ managed 1.3% for the year, and for the month of June a 180 million increase over May.
Agriculture managed a 130 million increase in credit for June over May. So much for the big pay down of Ag debt from the best season in a decades. Unless 0.4% YoY counts.
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