By Bernard Hickey
Building consents bounced 3.5% in June, thanks largely to a fresh surge in Christchurch. However, there was only a modest increase in Auckland that economists said showed not enough new houses were being built in the city to meet demand.
Statistics New Zealand reported there were 1,950 building consents issued in June, which was up 3.5% in seasonally adjusted terms since May.
Auckland consents rose 2% for the month in seasonally adjusted terms and the annual total in the year to June of 6,827 for Auckland is still around half the peak seen in 2004 before the leaky building crisis hit.
There were 197 apartments built in June, including 61 retirement village units. Excluding apartments, new dwelling consents rose 2.9% nationally in June from May in seasonally adjusted terms.
Statistics NZ said the trend measure of building consents was at its highest level in June since August 2007, but remained 26% below its January 2004 peak.
"Excluding apartments, the trend is up 88 percent from the most-recent low point in March 2011. It is now at its highest level since November 2007, but is 20 percent below the series peak in September 2003," Statistics NZ said.
The number of consented dwellings rose in nine of the 16 regions, with consents in Auckland at 553 in June (up 48 from June 2013) and consents in Canterbury at 623 (up 254 from a year ago). Auckland's consents fell for the second month month in a row, although economists said there was slightly growth in seasonally adjusted terms.
ASB Economist Christina Leung described the figures as showing an encouraging rebound with a seasonally adjusted 22.5% rise in consents in Canterbury, but that Auckland's growth was more modest.
"Meanwhile, we estimate dwelling consents issued in Auckland increased almost 2% over June on a seasonally-adjusted basis. The number of Auckland dwelling consents issued for the year to June totalled 6827 – still below the 9,000 houses we estimate will need to be built each year to keep up with population growth in the region over the next couple of years," Leung said.
"We continue to expect strong house-building demand in Auckland and Canterbury will drive construction growth over the next couple of years," she said.
ANZ Senior Economist Mark Smith said the figures showed a slight increase in annual residential cost inflation to 5.4% in June, albeit down from an annual rate of 7% a year ago.
He said there were improving signs for residential consents despite a recent lull.
"The floor area of issuance rose 5% in the June quarter, pointing to a strengthening in the residential construction upturn towards the end of the year, with increased renovation activity to provide additional support," he said.
"Auckland annual consent issuance is firming (6827) but remains below historical averages," Smith said.
Westpac Senior Economist Michael Gordon said the 3.5% growth for the month was above the 2% trend growth seen recently and consents had more than recovered from a probably holiday related dip in April.
Labour Housing Spokesman Phil Twyford pointed to the second consecutive month of lower building consents in Auckland as a sign the Government's policy of encouraging more supply in Auckland was in disarray.
"This means in the first nine months of the Government's housing accord just 5,278 houses have been consented. At this rate they will finish 2000 short of their target of 9000 houses consented in the first year of the accord," Twyford said.
"Auckland Council estimated the Government would consent 9,000 homes in 2014 anyway before most of the special housing areas were announced. This is an unambitious target but the Government can't even meet that. Auckland needs 13,000 homes per year to meet demand and make up for the shortfall in consents under this Government," he said.
"In spite of Housing Minister Nick Smith's frantic efforts to make it look like he is doing something about the housing crisis, the Auckland Housing Accord is pretty much all he has got. And 14 months after he announced it, he hasn't built a single new house in the Special Housing Areas. These consent figures demonstrate yet again the ongoing failure of the Government's attempts to fix a broken housing market by doing nothing more than tweaking the planning rules."
(Updated with background, economist and political reaction)