Auckland housing shortage worsens as new dwelling consents decline while migration sits at new high

Auckland housing shortage worsens as new dwelling consents decline while migration sits at new high

There is little to cheer about in the latest building consent figures, with a sharp drop in the number of new homes consented in September.

According to Statistics NZ, 2550 new dwellings were consented throughout the country in September,  well down from the 2834 consented in August, the 2811 consented in July and the 2752 consented in June, but up 13.7% compared to September last year.

Crucially, there was a significant drop in the number of new dwellings consented in the Auckland region, where high migration-fuelled population growth is causing a worsening housing shortage.

There were 752 new dwellings consented in Auckland in September, compared with 970 in August, 1087 in July and 921 in June.

Although the 752 dwellings consented in Auckland in September was up compared to the 643 consents issued in September last year, the fact that consent numbers in Auckland have declined substantially for two months in a row is a concern because it corresponds with a new surge in migration to a fresh record high.

There was also a big drop Canterbury where 458 new dwelling consents were issued in September compared to 568 in August and 525 in September last year.

There were smaller falls for the month in Waikato, Bay of Plenty, and Otago. 

The decline of consents issued in September was across all housing types - apartments, houses, retirement village units and townhouses/home units (see graph below)

However Wellington went against the trend, with 294 new homes consented in the capital in September, compared with 161 in August and 126 in September last year.

The total value of new dwelling consents issued in September was $893 million, plus there was another $169 million of structural residential alteration work consented, taking the total value of all residential building work to $1.062 billion for the month, down from $1.181 billion in August but up 16.6% compared to September last year.

On the commercial property front, $509 million of non-residential building work was consented in September, which was the lowest it has been since May.

The value of non-residential building work consented has now fallen for three consecutive months since it peaked at $739 million in June.

Building consents - type

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The 'All Dwelling Types' chart will be drawn here.
The 'Apartments' chart will be drawn here.
The 'Houses' chart will be drawn here.
The 'Retirement Units' chart will be drawn here.
The 'Townhouses' chart will be drawn here.

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Auckland buildings are subject to an off the scale high land cost, as demand falls due to LVR reductions we should expect to see the greatest reduction in building rate in Auckland.

Hopefully it will be offset somewhat by building rate increases in lower cost areas - Tauranga, Hamilton, Kapiti Coast, Whangarei, Christchurch.

Hopefully it will inform Auckland Council that it would be a good idea to open up land supply to Auckland City - Clevedon Valley, Whitford Hills - areas close to the city where suburban development is currently forbidden.

Well..... approx. 40% of buyers is out of Auckland now. So the demand is shifting to other areas.
Makes sense to build where the demand is and where the prices are still reasonable (within reach).
It is also way cheaper to build outside Auckland.

The migrants are not the main issue - I doubt that each of them is coming with $200.000 and gets $200.000 job to take the mortgage to buy 'average' house in Auckland.

My suggestion is - focus on the demand. Multiple property buyers, investors and overseas buyers are the problem.

Look at the huge dip every January.

This is when the councils shut down.

They stop doing any work around mid December and don't really start again until the start of February.

Lets not kid ourselves for the fall in consents , the reason for this is that building costs have now gone off the radar.

Quite simply the price has risen to beyond what buyers can reasonable afford , or the banks will reasonably lend .

And , whats-more the prices of materials charged by the 3 dominant players in the oligopoly borders on criminal . They would not get away with this across the ditch

Its simply an affordabuility issue , with basic construction costs much higher than comparable cities like Sydney .
The only thing still cheaper than Sydney is the cost of a section , and even that is overpriced in Aucks

"The only thing still cheaper than Sydney is the cost of a section , and even that is overpriced in Aucks"

Land in Sydney costs more, than the other Aussie cities.

Unfortunately it costs much more to buy land in Auckland than in Sydney.

This is the plan. Keep asset prices up at all cost. keep immigration high, supply down and the greedy can continue to live off the back of the serfs. How long are the masses going to suffer this corruption? More votes coming Winnies way....

I think it's more a sign of credit markets tightening in anticipation of GFC2;

I'd be interested in seeing the stats for open/pending plans waiting to go through consent process. What I've heard is the Auckland council is backlogged due to the difficulty of reviewing under pre and post unitary plan.

As expected, the existing housing market is slowing, taking construction down with it.

Greg I really disagree with your headline, you should know that buliding consents are seasonal. In your article you say that Sept 16 consents are 13.7% higher than Sept 15, which the graph shows is higher than Sept 14 which in turn is higher than Sept 13. So building consents are going up YOY but your headline is very bearish and talks about declining consents. You should know better...

Thanks for your feedback but what we have seen over the last 3 months is a plateauing (nationally) and now a downward dip. In Auckland the trend has been down for 2 consecutive months and quite substantially. So I'm quite comfortable with the headline.  

There is major credit rationing occurring now. The Aussie banks have put out the order to pull back big time. Supply is heading down.

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