Number of residential building consents issued in July down compared to last year 

Number of residential building consents issued in July down compared to last year 

There’s been a 7.9% increase in the number of residential building consents issued in July compared to June.

However compared to July last year, the number's down by 1.7%.

According to Statistics New Zealand, consents were issued for 2,762 new dwellings in July, compared to 2,560 in June and 2,811 in July last year.

Residential consent numbers now look to be flat-lining at just over 30,000 per annum, after steadily increasing from a 2011 trough.

Looking at Auckland, the number of residential building consents issued in July fell by 313, or 29%, compared to last year. This was the greatest fall of all the regions in New Zealand.

While 774 consents were issued, Stats NZ data indicates 1,230 new homes need to be built in the region each month to keep up with population growth.

Auckland’s numbers are quite volatile because almost half the homes consented were in multi-unit projects. On average, the region consents over 800 new homes a month.

Otago experienced the largest increase in activity, with 114 or 68% more building consents issued in July 2017, compared to July 2016.

The push up to 282 was driven by a spike in consents for apartments in Queenstown.

Meanwhile at 260, the number of residential building consents issued in the Bay of Plenty was the highest it has been since August 2006, and the third highest since at least 2002 when interest.co.nz started collecting this data.

The total value of new dwelling consents issued across the country bounced back up to $1.018 billion, from $917 million in June and $895 million in July last year.

Flat-lining

Of the 2,762 new homes consented in July, 1,900 were stand-alone houses, 367 were apartments, 145 were retirement village units and 350 were townhouses or units.

ASB economists say: “Residential issuance has effectively flat-lined over the last few months and is still running short of what is needed to meet current population growth, let alone to alleviate dwelling shortages in Auckland, Wellington and Queenstown.

“There are a number of potential catalysts, including capacity constraints in the construction sector, rising mortgage interest rates, growing election uncertainty, and the slowing housing markets. The jury is out on when the positive upward trend will reassert itself."

Westpac senior economist Satish Ranchhod maintains these constraints will see a period of "subdued construction growth", even though "there is still a large pipeline of planned work".

“The concern is that a softening housing market will tip the balance more in favour of buying existing dwellings rather than building," ASB economists add.

Turning to the commercial building sector, the value of non-residential building consents issued in July rose to $576 million, from $451 in June. However the value was down from $614 million in July last year.

Ranchhod says: “There is a large amount of work planned over the coming years. However, at least for now, we are seeing some signs that non-residential construction activity is levelling off.”

Building consents - residential

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developer can't access the loan as easy as before

This is hardly a surprise - as anyone who tries to get a consent in auckland knows - the interpretation of the rules change on a regular basis between different council officials - RFI's come back one at a time over several months instead of within a three week period after submission - and cost to build is increasing at 7-10% per annum - many developers are simply shelving plans at this time and even more so with the uncertainty around a CGT and other potential taxes on property investors - who ultimately financially underpin these developments by buying of the shelf - cue those who want to knock all the landlords and property investors out there - be careful what you wish for - as without them the New housing stock just simply wont happen

Only then, will Labour find out the disaster they have created and that they seriously need to build "the" 100,000 houses sooner and maybe sell them at a loss to accommodate their voters' anger and dismay !!

Labour are saying they will build 5000 affordable homes per year in the Auckland region.
My guess is factory built to reduce the labour component.
I dont think that will pop the auckland house prices.

So if the demand and/orvolume for consents has buttoned off, why then has is the consent process by the councils not delivering faster instead of slower, generally. Sure you get the statutory 20 business days undertaking, and then the series of questions, most of which are simply padding for revenue, on the 18th day to send the whole thing round the mountain again.

Developers are and always have been speculators and/or land bankers. They are as shaky as the rest of the speculators right now.
Yeah the council is an absolute pig but that is the cost of doing business in the development game. CGT would make no difference to a developer, they pay tax on any profit they make just like any other normal business.
God forbid anyone knocking investors/speculators in the property market in this country, for they will be smitten and banished to live under bridges for their blaspheming ways.

Investors buy off developers. That is the issue. LVRs have had more effect than people realise. CGT has a large potenial to stall this economy. I'm not necessarily against a CGT other than the nightmare it would be to administer. But if they are introduced they should be done so fairly, as in all capital gains. Even the family home. Income is income. I'm no green eyed monster...

Not quite
The days of the Group Builders, Neil Homes, Universal Homes, who did the total turn-key operation are long gone - purchased raw land, developed it, sold land and house packages, built the houses, but you had to buy their house, their plans, couldn't buy the land only

Now-a-days
There are builders who
(a) do custom builds to customer specifications on customer owned land
(b) are spec builders who buy developed sections, build a house and then sell
(c) do renovations, do-ups, extensions to existing homes

Why on earth would anyone/a developer build into today's 'suspect' market when they believe that given a bit of time 'things will return to normal'( "Property prices always go up!"). Until it becomes clear that 'normal' is building into a static price market and the only way to enhance profit is from an increased supply ( 100 house x $50,000 profit each), not more price supply ( 10 houses x $500,000 each) then expect Consents to keep falling. Eventually, a profit/income drought will take its toll, and maybe those who see the 'new normal' for what it is will have started building early, and reap the rewards/ Chances? Slim!

That's another reason for why Labour's KiwiBuild idea is needed. The government needs to commit to getting more affordable homes being built. The best way for this 'new normal' to get established is if the government kickstarts it with their own big building programme.

Whether you make $50k or $500k per house it still takes the same amount of time to build a house. Reducing your profit margin will not increase "stock turns" or enhance your profit dollars vs profit percentage any better.

Globalist wages, immigration and real estate.
Protectionist construction methods and building materials.

The nanny state has gone too far. Why should some pencil pusher at the council care what kind of plaster board the interior of a house is lined with? Why should Winstone robbers get a tariff on elephant board?

The Nanny State was last time around. By the measure of whom it favours, this government is The Granny State.

As the gurus say, the supply of housing is inelastic, so why would this be a headline?
Even the heyday of state housing couldnt defy that rule, so its time to cut immigration and foreign investment.
That should satisfy a few commentators.

Auckland is a high cost and low value market with falling prices. You would have to be very brave to invest there now.

It is a myth that Auckland is having a housing boom.

Auckland needs to build 13,000 houses a year to keep up with population growth. That is 1,083 houses a month.

To reduce the accumulated housing shortage that is driving homelessness and overcrowding, Auckland needs to build 15,000 houses a year. That is 1250 houses a month.

Auckland consenting only 774 houses in July is woefully inadequate. This can only continue to drive 3rd world housing problems such as was front news on NZHerald today. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11913397

In the last year and half, in Auckland, only July 2016 at 1087 consented houses and November 2016 at 1156 houses were enough houses consented to keep up with population growth and at no point has enough houses been built to seriously dent the homelessness and overcrowding housing crisis

P.S housing consents is a leading economic figure -it is an indication of what will happen, most consents are converted to actual houses, but there is a delay of months/years.

What is needed is a government willing to acknowledge that we have a housing crisis. Down here in Canterbury where we actually did have a building boom after the 2010 and 2011 earthquakes, no one questioned there was a crisis. All the big players came together -the private sector, government in Wellington, the big infrastructure public departments -NZTA etc, Christchurch City Council, Waimak and Selwyn Councils... they all did their part (although on residential housing CCC were the least effective and there is plenty of room for improvement).

Auckland needs to do something similar and it needs to come from the top. A clear message of ...Let's do this... should be coming from our nation's leaders.

The current administration has lost credibility when it comes to housing. Too many years in denial, too much lies, too much half-truths and misrepresentations.

We need a change in government and we need to hold that government to account for really fixing the housing crisis this time.

I'd like to put forward a contrary view, that the construction industry is big enough as it is and we should be limiting population growth to solve this housing shortage.

My reasons - construction is a domestically bound, low productivity sector with a massive environmental footprint, prone to extremely nasty boom and busts. Already construction and real estate services are more than 10% of GDP, greater than manufacturing. I suspect the more construction there is, the lower NZ's productivity growth.

Driving around greater Auckland there seems to be no shortage of houses going up, and every builder is busy. I believe it would be much better to try and stabilise the industry at current levels. Cutting immigration would stop the problem getting worse, and taking away the residency carrot would reduce the number of student visas and help the rental shortage.

Agree - Cities are man made natural disasters.
there is an assertion that cities produce wealth. They don’t, they are the ultimate consumption machine. Sustenance has to be trucked in, wastes have to be trucked out. The bigger the city, the more of that becomes necessary.

See if you can spot the satire ..
http://www.theonion.com/article/houston-residents-begin-surveying-damage...

There are still many in the position of power yet to work out that under the current property culture in this country a price rise in the existing housing stock is needed to incentivise the private sector to build more houses. The opposite is true when housing stock values go into decline. If a structural shift is required to build more houses, you have to change the structure; otherwise we get more of the same.

Quite right. And here's how the structural change comes about .....Building Company failures (from lack of development). Eventually, major companies ( like GJ Gardner, Signature etc...just to use known names) start to realize that unless they keep their teams together, they won't be in business when the tide turns back in their favor. So...they start building en-masse and selling, flat! Not profit margin; just cover all the costs, and keep the management/building teams in tact. But that takes fear to set in first. Once it does, structural; change will happen as a matter of necessity. The trouble is, The Government/RBNZ/Vested Interests will lose their courage before that happens, and that Structural Change you want....goes away.....

If you can't sell a house how can you build one

Where did the first house come from?

The first and only buyer brought it

Why would you choose to build a new home given the time it takes if you think it could go down in value

Because it's so expensive to build a new house and the market looks to be going down so the differences between a new home and a second hand home is only going to get greater why wouldn't you move away from the new home option

Here is a series showing building consents back to the 60,s
http://www.stats.govt.nz/browse_for_stats/industry_sectors/Construction/...
Interesting the peak was about the time of capitalising the family benefit
Remember a consent is not a completion, so builds could follow a different curve.
Draw your own conclusions.

Thanks -good graph. I have an article which includes a series of graphs about the myth of Auckland's/New Zealand's housing boom. https://medium.com/land-buildings-identity-and-values/aucklands-housing-...

In particular, there is a long run series of NZ's house building rate per 1000. That shows the rate NZ is currently building is around the long term average. It cannot be called a boom. We were able to build much faster in the past.

You have some excellent articles there.
Good work.

Thanks for the positive feedback Nymad.

Making it easier for our cities in NZ to grow organically has been my motivation. I have had some successes.

Greater Auckland yesterday did a follow-up article on my idea of reciprocal intensification, which recent legislative changes makes easier to do. Resource Law Amendment Act 2017, which was passed into law back in April, implements a version of the reciprocal intensification’ proposal. Section 87BA of the RLAA. Read more about it here https://www.greaterauckland.org.nz/2017/08/29/legalising-perimeter-block...

I think it is exciting times for NZ cities. A real conversation is being had about the nature of our cities. Perhaps for the first time ever, certainly in my lifetime, issues of housing, transport and urbanisation in general are rising to the top of the public debate.

I have tried in my way to add to this conversation with a collection of writings on a blogsite -New Zealand needs an urbanisation project. https://medium.com/land-buildings-identity-and-values

NZ needs an urbanisation project like a hole in the head. Urbanisation demands resources (energy in many forms). Its stuffs the environment. Its a population ponzi scheme.
To repeat
"Cities are man made natural disasters. There is an assertion that cities produce wealth. They don’t, they are the ultimate (energy) consumption machine. Sustenance has to be trucked in, wastes have to be trucked out. The bigger the city, the more of that becomes necessary."

ham n eggs,

I read the links you put up on US shale oil. They were interesting and thought-provoking. If correct,then how long can it be before oil heads back to-and beyond-$100pb?
There are obvious implications for the global economy,but would that not also spur more drilling and exploration in its wake?

As soon as OPEC reduces production.
It's only H&E that doesn't realise that that's the only reason the oil price is so low.

isnt OpEC stupid... selling its Oil cheaply when they could make millions by giving you a bell.
I dont know why they havent thought of it.

What you haven't thought of is profit maximisation in markets.
A little bit more Nash and a lot less Gail The Actuary, is what you need.

So Opec is behaving logically? hmmm??
https://uk.reuters.com/article/uk-saudi-economy-reserves-analysis-idUKKB...
In that case low Oil it is.

Linklater - Its possible you might get a bounce temporarily so that more Oil can come on line but Im sure you are aware that a higher priced barrel affects input costs right through all supply chains. EVERYTHING becomes more expensive. This comes with huge deflationary pressure. So its unlikely to stay up there for long. We need cheap Oil to keep the show rolling.

I read a comment yesterday which sums up a big part of the problem.
"90% of our total supplies come from conventional oil supplies. That have permanently peaked and are now declining between 3-7% a year. And for everyone 1% decline of conventional oil supplies Shale as an example would have to ramp up 20% every single year to cover the difference"

Comments like this are why no one takes you seriously.

Cities are by the most efficient means of housing a population. That is an undeniable fact.
You have some sort of crusade behind debunking economic theory. However, the core issue is the population, not the economics around how they it is organised.

Nymad - there you go twisting someone else's logic again.
The implication above is that cities can "organically grow" through urbanisation ... to help DECREASE the strain on resources. A complete fallacy.

A growth in metropolitan density is synonymous with decrease in the strain on the environment and resources.
That we can easily prove.

"That we can easily prove."

Im all ears. Because my farming background says this isn't standard maths.
If we put 10 people in each Auckland house, would that help?

"Triumph of the City", by Edward Glaeser.
That should be your first port of call to give you the intuition.

To quote ... Cities are the engine of growth... Sounds like we should be looking at 100 per house to really clean up the environment?
Which might be a good time to have a look at the underlying problem here .. Overshoot: The Ecological Basis of Revolutionary Change by William R. Catton Jr.

We started this talking about 'proof" now you switch to "intuition? yeah Ok well maybe not.

His focus is based on how a city has a super effect ie the bigger it is the better the multiplication effect not on how sustainable the density of a city is. The problem with increasing density (and size) is you consume more energy doing it and that energy is oil the output of which per day is at its peak. So simply without very large quantities of cheap transport energy the ability of a city to survive is questionable.

One of the cheerleaders for Houston's no zoning urban planning regime - very worth reading this;

https://www.fastcodesign.com/90138324/harvey-is-catastrophic-and-houston...

Plenty of links embedded in the article too - suggesting this was totally predictable.

Unchecked sprawl, fueled by developer-friendly laws with little regulation or enforcement, has crippled the region’s ability to handle floodwaters.

Nice - Hugh-Pavletich and Phil-Best will have to update their bibles

Additionally, I suspect the 1000s of homes that flood repeatedly in their 1 in 100 year floodplain (3 times in the last 10 years) also bring down the average cost of a property - so that might have something as well to do with their median multiples.

Uh no. What you might get is a reduction in strain on the environment per capita compared to others methods, but simply having more ppl brings the need for consuming more resources which is more strain.

Otherwise if its so easy, prove it please.

exactly. The per capita strain is irrelevant. The environment only cares about the aggregate.

Have hear many builders say the same and they lay the blame squarely at the feed of council, RMA and S&H regulations. That is why you see very few smaller builders now. I know quite a few who have given up and either contract-build for big players or do renovations instead.

And that is unfortunate because our crafts building system is based on relatively small building organisations.
You have probably observed that large building organisations tend to go broke.

How many 100 square metre single level houses (of yester-year) can a builder build in 12 months and then compare that to todays fare of 250 square metre two-storied McMansions - how many can a builder build of those in 12 months - more or less?

Anyway who wants to buy and live in todays standard fare of 2 story cookie-cutter cheek by jowl identical row-houses - and pay $800,000 for one on 200 square metres of land

About the same number of houses. Efficiency in building methods and tools (pre assembled trusses, nail guns, slab foundations, advanced adhesives) should easily offset the sum increase.

Positivelywallstreet, At some time between 1965 and 1975 houses went to internal garages so there was a extra 30 odd square metres to the size of the house without really getting a bigger living area, garages were separate , I've been in plenty of old homes without a garage and I've been in plenty of 180 square metres homes with the garage in one and the living area is about the same, 140 square Metres , I'm not saying houses haven't gotten bigger just that theres 36 square metres of garage to think about and yes the middle to upper class have bigger houses this days, but the so called affordable houses are tinny cheap rubbish

Yes, I take your point.
And then we went to double garages.
Yes, I often say that to reduce the price of our houses we need to reduce their complexity.
But that doesn't mean they can't be pretty and comfortable.
I believe to achieve that we need to loose our addiction to timber framed houses.
Its just a big mistake like life in general.

and the National Party is still harping about on Supply.. what is supply when they are not being built.... tackle demand!!!

Don't worry - they have muzzled Dr Nick Smith for the duration

There no affordable land and FHBers can't afford new homes, so the future for supply in Auckland is appartments, yes tackle demand, or people will leave and sales will stay low

National bangs on about supply, but it's merely clanging pots and pans. We haven't actually seen them meaningfully increase supply in their nine years in power. Don't expect any action should they be reelected, merely more banging on with accompanying inaction. Until 2 years and 9 months have passed and the talk begins again of what they'll do "this time around if elected again, promise".

Funding is really hurting developers and buyers. Funding costs for developers has gone up 2-3x and banks aren't giving pre-approvals for buyers to be confident they can settle 2 years out. The Government is missing a trick by not launching a scheme through kiwibank to back some loans. They could win a big slice of new business and really get some positive branding out of things.

Investors are sitting on the sideline until all the talking heads finish talking about how they will make it less attractive to be a property investor. A new build in Auckland is negatively geared unless it's a cheaper apartment. If Labour puts in the rule change only a cashed up investor will buy new in Auckland.... meaning Mr Government gets to be a landlord again! If you've every owned a HNZ-leased property you know how effective they are at that.

The other main cost in Auckland, RMA and council will take a looong time to be addressed because of the political storm that would be kicked off by daring to change anything that has anything to do with the environment.

What has The Government got to do with Kiwibank?

"Kiwi Group Holdings (KGH) was established (2016) as a holding company which owned Kiwibank, Kiwi Insurance Ltd and 76 percent of New Zealand Home Loan Company.

No wonder. The people who need the houses simply cannot afford to build houses at the ridiculous prices for land and building materials in NZ. Not only that, they cannot afford the rental on new houses with these prevailing costs, so I would be surprised if landlords see building rental homes as an economic proposition. The market has broken will not recover until the fundamental problems are fixed. The incoming Labour government needs to urgently and effectively deal to the artificially constrained land supply and the monopoly/duopoly building material supply market.

I agree Chris-M. I have personally met Phil Twyford -Labour's Housing spokesperson and made those points to him. He certainly understands these house building cost issues and I believe Labour is committed to pushing through effective reforms. I have heard Phil Twyford talk about land-use restrictions causing land banking and pressure cooking prices and three years ago he was calling for the Commerce Commission to investigate the anti-competitive practices in the building material market. http://www.labour.org.nz/commerce_commission_inquiry_needed_into_buildin...

Also the promise to build 100,000 affordable kiwibuild houses is kind of a Cortez 'burn the ships' move. Labour has to find ways to reform the housing market so it can build those houses affordably. I think voters should see it as a sign of Labour's serious commitment to reforming the housing market.

Yes Brendon. Until the government reforms these markets, it will be forced to continue building houses for an ever increasing proportion of the population. Simply not a viable long term solution.
Until they get the mess sorted out, I find it incomprehensible that any sane government would continue to make the problem worse with such naively open boarders and foreign investment rules.

last year we helped fund approx $1b of development.

The regulators inability to stem house price inflation, Auckland councils slow track consenting process, the rampant increase in the cost of land, and now construction costs coupled with the LVR restrictions have put the handbrake well and truly on.

cant see things picking up for many years.

I can't see how the LVR restrictions slowed new builds that much, new builds aren't normally in demand by investors for rentals and how many FHBers could afford a new house, new homes are normally older and richer people who would have a decent deposit anyway and buying to live in, they probably simply think new builds are to expensive and if it carries on in Auckland they simply just keep moving out like they have been, don't forget housing sales are down , immigration is up , rentals prices aren't lifting that much and towns outside Auckland are growing heaps, that all says a lot

If you study the spread sheets that stats publish and run a few formulas over them you can see that the year to July is almost identical to the year to June. I would not take too much notice of monthly fluctuations. Interesting that Canterbury is still building at a huge rate despite difficulties in clearing stock of new builds and rentals.
I note that average cost of new builds pretty steady at $360,000 which would make house and land packages at least $600,000 everywhere apart from Auckland and Northland.
I live in hope that the journalists would study the spread sheets before writing articles.

which would make house and land packages at least $600,000 everywhere apart from Auckland and Northland

Ah, no.

Christchurch and surrounds house plus plot starts with a '4':

Here: (set min $300K, Max $500K) http://www.mikegreerhomes.co.nz/home-and-land/search/?subdivisionid=&reg...

Here: https://www.generation.co.nz/christchurch-house-land-packages?floor_area...

Here (search Christchurch, under $450K) : http://www.stonewood.co.nz/house-a-land-packages?field_price_value=1&fie...

A Public Safety warning to Awklanders:

Do please try to direct your copious tears away from the keyboard. Moisture, especially salty moisture, is simply murder on electronix....

And lets not ferget, chaps and chapesses, that an old dunger knocked over, one new one consented and built, does not alter total housing stock.

So counting consents as positive and not counting demolitions as negative is bad inventory-handling....

Could we please have commentary that analysis market in particular terms, not generic. There is not a shortage of housing in Auckland. There is a shortage of good quality housing to rent at reasonable prices. That sort of housing is not being built. There is a surplus of 3-4 bed houses being built in the places builders and developers think they can make money when zoning changes. Developers and builders are retreating because of no capital gains in Auckland now, so they will start (and have already) selling as quickly as possible and releasing new builds faster, aggravating supply surplus and weighing down on market prices. Also, the Pakeha 40-47 yards age bulge has passed through and the Asian one will not compensate until 2023-25, so there will remain a shortage of owner buyers or mid age renters making purchases, except where parents in multi-family households subsidise deposits. Auckland had a mania based on Chinese freed up funds released in May-June 15 by the Chinese government lifting limits on exporting of capital by rich people in biggest 6 cities there. That was re-imposed in January 17. In addition, investors (people buying property to rent it out) dominate in Auckland. They have been pasted by the 40% LVR and poor yield and no capital gain prospect. So, Auckland will continue to decline in sales terms and less so in price terms, for 2 years at least and this will bring on an economic recession.