The flattening trend of new house building activity has continued in September.
Figures from Statistics New Zealand show that in seasonally adjusted terms building consents, excluding the volatile apartment activity, rose 2.6% in September.
If apartments, which vary wildly in numbers from month to month, are included, then the rise was just 1.4%.
Since rising very strongly in the early part of the year building consents figures have been subdued, though still rising - albeit from very low levels of activity.
The modest rise in September was despite the fact that the earthquake rebuild in Canterbury saw that region consent the highest number of new dwellings in 37 years.
Of greater concern will be the Auckland figures. The number of consents, at 489, was the lowest since April and was up just 6.8% on the figure for September 2012. This was the smallest month-on-month increase since April, when the 431 consents figure was some 19.7% higher than the comparative in 2012.
Some months this year the month-on-month growth has been considerable, with a 91.3% gain seen in July compared with the same month in 2012.
Auckland added over 10,000 houses annually in three consecutive years in the early 2000s but since then annual figures have plummeted, averaging well under 4000 a year between 2009 and 2011 before recovering somewhat to 4582 last year.
The Auckland housing market is already looking overheated and the region has a perceived shortage of about 30,000 houses. The Government and the Auckland Council have agreed an Auckland Housing Accord, through which it is aimed to build 39,000 houses in the next three years.
The Reserve Bank's already concerned about rising house prices and the impact that a 'housing bubble' could potentially have on the financial stability of our major banks. The RBNZ's clamped on "speed limits" on banks' high loan to value lending as of October 1. See here for articles on LVRs.
Weak Auckland
Westpac senior economist Michael Gordon said the September consents figures were "surprisingly weak in the under-supplied Auckland market". The Auckland market remained "worryingly subdued".
ASB economist Christina Leung said there were signs that house-building demand was "slowing" in Auckland.
"There have been recent anecdotes from building companies that the restrictions on high-LVR lending, which took effect on the 1st October, are discouraging house-building demand.
"Building companies are reporting concerns amongst some households that if a top-up in mortgage borrowing is needed should unexpected additional building costs be incurred once the building project commenced, then there is the risk of the mortgage hitting the 80% LVR threshold and impacting projects," she said.
Leung said dwelling consent issuance for the year to September totaled just over 5600 in Auckland – well below the 13,000 of new houses the Auckland Council has estimated will be required each year to keep up with population growth over the coming years.
Canterbury record
Statistics New Zealand said a total of 599 new dwellings were consented in Canterbury – the largest number since records began in April 1976.
"Christchurch was the main driver of this month’s increase, with a record number of 309 new houses and apartments consented," industry and labour statistics manager Blair Cardno said.
Across the country, 1860 new dwellings were consented, with Auckland and Canterbury accounting for 58% of the total.
The "trend" for consented new dwellings is at its highest level in more than five years, but the increase has been easing over the past few months.
Building consents - residential
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28 Comments
The Auckland... region has a perceived shortage of about 30,000 houses.
It must be higher than this now. I have been reading this figure for many months all the while not many new houses have been built and immigration to Auckland has surged. Rather than reducing, this figure must be increasing. Please can someone crunch the numbers.
The good news is, there is a construction storm coming in Auckland, if we can find the skills to do it.
Would it be the house building revolution:
http://www.youtube.com/watch?v=JdbJP8Gxqog
3D house printing.....
The 'storm' may well be in Auckland but the benefits will all be elsewhere - we have the skills here, but not the inclination. We are issuing work visas so immigrants can build houses for immigrants
http://www.stuff.co.nz/dominion-post/business/9310944/Prefab-imports-ma…
http://www.interest.co.nz/news/67087/rodney-dickens-unpacks-detail-with…
"we have the skills here"
I keep reading this but I assure you we do not. We have a serious skill shortage that can only be met by bringing people into the country. I'm not talking about unskilled/semi-skilled labour. I'm talking about professionals - Engineers, Surveyors, Project Managers, Quantity Surveyors etc. I think this is one of the biggest problems we face. Even if we have the inclination and the finance we can only achieve so much without the right skills to do the work.
There's been hardly any building for five years so hardly anyone has been trained in that time. Companies need a balance of senior, intermediate and junior staff. There are only so many junior people you can put time into training.
Do we want to wait another 5 years to really start building at volume in Auckland? That would work in terms of skills available out of Christchurch. I thought the idea was to build lots of houses asap though. If it is then we need to import.
In hindsight there are lots of things we could have done to avoid this situation. We can't turn back the clock now though. All we can do is get on with it or keep on standing by watching the problem get worse and worse.
There are hundreds of engineering graduates each year from New Zealand universities. If you employed 3 of them for the same money as 1 experienced overseas import and they twiddled their thumbs for 25% of the time, I'm sure they would be fast learners and just as productive in a short space of time.
There are apparently 85 workers on average competing for each job in the UK. Even if it was slightly fewer here that is a lot of wasted human resource that could be doing many of the low or semi skilled jobs like painting etc in Christchurch and Auckland instead of imported labour. Can't tell me all those people looking for work, any work, are indolent and not able to be shown how to use a roller, brush or paint sprayer to an acceptable standard. Immigrant work gangs on work or tourist visas seems wrong to me
If only it were that simple! Every time you employ a graduate your net productivity actually declines. Juniors need training and supervising and their work needs reviewing and correcting. That takes up the time of senior people who could be doing actual work. It's a chicken and egg scenario.
I can not give enough credit to any company that employs a graduate and trains them up. Once these graduates have about two years of experience they are highly valuable. Before then they are the equivalent of muppets in business shirts.
The argument about letting unskilled and poor people in is a big can of worms. Do we feel any social responsibility beyond our borders? If not, don't let them in. If we think we are part of one global community, or we feel obligated to helping other people less fortunate than ourselves we have to share the burden and let some in. I'm not sure about immigrant work gangs on work or tourist visas? Maybe send them away and get the graduate engineers to do the painting.
I think we have the balance all wrong at the moment. Quicker and easier for too many companies to recruit overseas. Many of our graduates have to leave to get experience while we import people, only some of whom intend to stay while most will repatriate their excess earnings and capital gains from their property purchases. Short termism is something NZ excells at.
Agree entirely but it is what it is. We're short term thinkers. That's why we have a problem now. We need a solution now. Training people takes years. Importing them mere months. Nothing will change.
It's a bit rich of us to complain about immigrants repatriating their excess earnings and capital gains though. Aren't kiwis the world leaders at this? We do our OE's and send a deposit for a house home. Also, I don't know many people that move to NZ for the excess earnings they can accumulate. Those people go to Aussie, middle east, anywhere but here.. You come to NZ because it's one of the best places on earth to live and raise a family, safely.
So the ones we dont train, sit on the dole, collecting $s or take min wage unskilled jobs and get WFF. So we import people who apparantly know what they are doing to tax them to pay the dole and/or WFF.
Yes that makes sense.
Otherwise, "best places" yes I agree....but you need a decent wage to take advantage of that.
regards
Most of the (non EU, US) overseas engineering graduates Ive met I wouldnt want tieing my shoes let alone a building.
The few I know who have qualified in the last 5 years have all gone to OZ, too little work here for them....and it takes 5 years to make a decent engineer after their degree is done IMHO.
Otherwise I consider degree qualified NZ engineers with experience very good...they can stand up to the world.
regards
Yet I know engineers and project managers who are moving to oz or have moved or left engineering. Either for more money and pension, and/or simply to get enough work. The migrants do the same, stay here until they sort a NZ passport then bugger off. I used to do engineering, I now do IT, 50% higher wage and a relatively high job security in comparison.
I'd suggest the shortages are more in the trades right now, than professionals. Somehow cant afford to pay a competitive wage, yet we have a proprety bubble and sky high prices. I assume its the debt sucking out the profits...something sure doesnt seem to add up.
regards
That Dominion Post article talks about imported Chinese pre fabs yet we have the roll forming machines made here, the steel produced here, SIP panels manufactured here and a ready supply of low cost labour to build thousands of standard designs every year from one factory going 24/7. It's not rocket science, just a step up from building steel sheds. Labour could be trained in days to assemble them. But where is the cheap land. Do you put sub $100,000 houses on Auckland sections?
Steel is made here?
Where?
http://www.scnz.org/steel-procurement/nzmade
suggests not......
Not as easy as you suggest, and actually I'd do a PDK and use ready made feeezer panel walls, 100+mm thick and yes some steel or better wood framing....not hard at all.
Then again there is what ppl expect....
regards
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11149084
RBNZ wants to take the heat out of the Auckland market so are experimenting with LVR limits. Looks like the result of the experiment will be less houses built and prices rising higher and faster.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11149072 indicates where the demand for housing is - not where the housing accord wants to put it.
Especially in provincial towns like Whanganui. Unless you are committed to the place for the rest of your life, given the cheap prices of entry level houses/do ups and the glut of supply relative to population, financially you'd be crazy to build new I would have thought.
Large cheap section in Whanganui for $21,000 but how much would a new home cost and would you recover the money if you had to sell?
http://www.trademe.co.nz/property/residential/sections-for-sale/auction-629363168.htm
Existing 4 brm home in same area. Looks very comfortable and $85,000, way below GV http://www.trademe.co.nz/property/residential-property-for-sale/auction-598512617.htm
This is the problem most provincial towns have. Land is cheap but relatively the existing houses are even cheaper. Even if the land was free it would be hard to make the numbers stack up.
Indeed, so no matter what, the houses in the right areas will still be in demand. Hence what does building on "cheap" land on the fringes fix? So sure we get cheaper housing for "poor wage" earners who then have to spend a fortune on petrol commuting....yes that makes so much sense, not.
regards
no need for a theory. Stick to facts.
1. Either we cease using fossil fuels, or we alter the global habitat to the point where all immigration bets are off.
2. Without fossil fuels, we are probably overpopulated right now.
3. Doubling-time applies to exponential growth and is a mathematical fact.
4. Tripling is the brainchild of a spinner - you. Representing?
5. Fracking is not an 'environmentalists vs developers' issue. What it clearly tells us, is that we are heading for the bottom of the barrel.
6. I'm anti overshoot. And people stupid enough to advocate it.
:)
Quite so WTF. The cost of houses is only loosly related to the price of house building.
In Kerikeri, quite a popular and still growing small town, we had an explosion of subdivisions in the 2000's. This was fuelled by rising house and land prices. By 2008 she was all over - hundreds of sections on the market and prices collapsing. It was the section prices that reflected the entire cost of the shake out - average section sale prices are now about half. Typical house now $400K instead of $500 but sections $100k instead of $200. House down 20%, section down 50%.
In a demand exceeding supply situation the sections are bid up so that section plus house equates with the market price of existing houses - give or take some skimming by council, professionals and builders/developers.
If you want to know the cause of slow building look no further than Auckland Council. I had a illustrious inspector on site earlier this week who refused to sign off, the reason, some loose gravel over a man hole. I told him I'd shovel it off right then and there, he said he had no time and he would have to do another inspection in 2 weeks time.
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