New dwelling consents dropped 12.5% nationwide last month and slumped 26.7% in Auckland

New dwelling consents dropped 12.5% nationwide last month and slumped 26.7% in Auckland

Statistics NZ is reporting a big drop in the number of new homes consented during September.

Building consents were issued for 2770 new dwellings, down 12.5% from the 3166 issued in August, but up 6% on September last year.

The month-on-month decline was even greater in Auckland, with consents for just 868 new dwellings issued in September, down 26.7% from August.

There was also a big decline in the Waikato, where consents for 293 homes were issued in September, down 17.7% compared to August.

New dwelling consents have also fallen in Canterbury for the last two months, but remained above where they were in September last year.

Wellington went against the tend and posted a 15.5% gain in September compared to August, (see the chart below which plots the number of homes consented in each region every month).

The numbers paint a grim picture for Auckland which is facing a growing housing shortage.

Statistics NZ estimates Auckland's population increased by nearly 43,000 in the June year, with two-thirds of that growth coming from migration.

At current rates of household occupancy that would require about an additional 14,333 homes to be built to accommodate all of the extra people that came into the region during the year, or an average of about 1200 new homes to be built every month.

But in September only 868 new homes were consented in Auckland, or less than three quarters of what was required.

That means the number of new homes being consented in Auckland would need to increase by about a third over what was actually consented last month, just to keep pace with population growth.

But even if new dwellings in the region hit the 1200 that are required to keep pace with population growth each month, it would not make a dent in the existing shortage of homes, which was estimated at 25,000 at the end of June.

And that shortfall continues to grow by the month.

On an annual basis, consents were issued for 30,892 new dwellings throughout the country in the 12 months to September, up just 3% compared to the previous 12 months.

During the same period the number of stand alone houses consented was down 0.5% compared to 12 months earlier and retirement village units were down 8.9%, while apartments were up 22.6% and town houses and home units were up 14.7%.

Building consents - residential

Select chart tabs »

The 'NZ total' chart will be drawn here.
Loading...
#issued Nationally
The 'Northland' chart will be drawn here.
Loading...
#issued in Northland
The 'Auckland' chart will be drawn here.
Loading...
#issued in Auckland
The 'Waikato' chart will be drawn here.
Loading...
#issued in the Waikato
The 'Bay of Plenty' chart will be drawn here.
Loading...
#issued in the Bay of Plenty
The 'Gisborne' chart will be drawn here.
Loading...
#issued
The 'Hawke's Bay' chart will be drawn here.
Loading...
#issued in Hawkes Bay
The 'Taranaki' chart will be drawn here.
Loading...
#issued
The 'Manawatu/Wanganui' chart will be drawn here.
Loading...
#issued
The 'Wellington' chart will be drawn here.
Loading...
#issued in Wellington
The 'Tasman' chart will be drawn here.
Loading...
#
The 'Nelson' chart will be drawn here.
Loading...
# Nelson
The 'Marlborough' chart will be drawn here.
Loading...
#issued
The 'Westland' chart will be drawn here.
Loading...
# Westand
The 'Canterbury' chart will be drawn here.
Loading...
#issued in Canterbury
The 'Otago' chart will be drawn here.
Loading...
# Otago
The 'Southland' chart will be drawn here.
Loading...
# Southland

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

42 Comments

Comment Filter

Highlight new comments in the last hr(s).

its relatively a decent volume for Auckland considering it was election month

Alas, given the underlying demographic situation in Auckland, this latest data means there will be upward price pressure on the stock of existing houses.

I believe a period of some stability would be preferable.

TTP

TTP, explain what's happened to house buyer confidence over the last 12 months? Dwelling consents have been languishing for quite some time. Why would house prices suddenly rise as a result of the latest media release? Its an interruption to the flow of money - banks are getting nervous. A deepening slump could well bring bring even cheaper money but increased difficulty in getting banks to lend on housing will mean money supply is TIGHT. The spiral begins.

A lot of unnecessary numbers and misleading percentages being thrown around (why compare August vs September % dips?). The only useful measure is "Building consents were issued for 2770 new dwellings .. up 6% on September last year.".

In short, given that September 2017 was election month, we still consented MORE versus September 2016.

This is a good result considering finance is harder to come by compared to last year and also considering the rising Auckland properties for sale in Auckland (currently 10.6k+ on TradeMe).

10
up

Fake news. I distinctly remember Bill English (when PM) implying that National had resolved the non-existent housing crisis, as prices were "flat to falling" and National were making "good progress" in getting houses built with their "Comprehensive Housing Plan".

10
up

Sorry, Bill who???

12
up

Graduated from the Stephen Joyce School of Post-Truth Economics, you remember?

Stephen Joyce is NZs version of Trump a buffoon full of fake news

(Anecdotally) developers are giving up on house building in Auckland. Costs are too high regulatory burden and risk steadily worsening and profits too low. And with market falling and likely swathe of significant law and regulation changes and probably interest rate hikes to come with new govt the profitability is even less certain.
https://www.interest.co.nz/sites/default/files/styles/full_width/public/...

Housing crisis is going to get worse not better.

The cost of materials are far too high. For years we have been fed the argument that we do not have the population base for lower costs but we seem to have a huge population needing to be housed now. I do not understand how this argument can hold up, someone is pulling the wool over our eyes

Nah everyone is awaiting the great KIWI BUILD EXPERIMENT to arrive

It certainly is exciting thinking about the new developments ahead of us. I can see a whole new city arising out of the paddocks of South Auckland full of vibrant people, free from the foreign buyers and speculators. Communities will arise from the people movers parked in Papakura that help each other and have empathy for one another. The streets will be litter free, the houses and gardens immaculately kept, drugs and alcoholism and graffiti will be a thing of the past. Doors will be left unlocked, children will play in the street again. It will be like the end of a long winter, the Ice Queen will finally be dead. Perhaps there will be portraits of Jacinda up in most people's homes. Jacinda or Cindy will be popular girls names, maybe Didge or even PocketAces for the more adventurous. People will be free from the evil shackles of the landlords and speculators. No one would dream of calling their child Zachary. People will have homes, not investments, they will develop them and improve them in order to enjoy living in them. They won't think about making a profit because they won't be allowed to sell them for a profit, but you know, they will be fine with that. Why would they want to sell anyway and leave the shining city on a hill in South Auckland?

A builder I have been talking to told me that in all his 18 years in the industry he has never seen such unusual developments (I will have to quiz him further on this). He said that he is now able to employ some very good builders as they are becoming increasingly available. I can only assume people just do not have the money to build or have the sense not to. I have also noticed quite a few building companies advertising homes on Trademe, it looks as if they are not selling as they used to, I don't seem to remember seeing this a few years ago. Does anyone know whether the building companies have a lot of stock sitting on their books.

When builders have to eat, they'll drop their prices. That's the Developers; the Tradies, the Real Estate crowd, and even the Councils ( who need the consent cash) - all of them, and at some stage they'll 'build at cost' just to keep the business going and the team together. And guess what? That time is not far away.....

Was not hard to read the writing on the wall. Chicken coming home to roust

Auckland Council has decided to make land high cost.

When house prices increase the amount of new constructive growth is slow, because building costs more. When house prices decrease the fall in new construction growth is precipitous, because building costs more.

Isn't it appalling that we can't even build as many houses now as we did 14 years ago even though house prices have more than doubled and population has increased 15%. What (other than regulatory burdens) can explain that?

12
up

I agree it's a massive issue.

Arguably, a big part of it is caused by the way we've failed to allow the free market to hold developers responsible.

Leaky buildings are an example of this. Rather than buyers being able to hold developers responsible for providing a fit-for-purpose product, we've allowed people to build and sell products that are not fit for purpose, and get away with it by simply closing their limited liability company and opening a new one. Buyers in many cases have been unable to seek redress from those responsible for the quality of the product.

Instead, we've allowed developers to say, "But, but...the council didn't stop me from building a crappy product, therefore it's their fault! Sue them!"

Ultimate abdication of personal responsibility and socialisation of the problem. Privatise the profits, socialise the costs.

Yep this. I could easily build a nice new house if I wanted to, freeing up the one I currently live in for someone else to use. But I have no trust in the NZ bullding industry, and can't see the value in what they provide, so will not be putting another cent into NZ property. Will just put up with what I have and spend money on other things.

Just did some googling...back in June this site recorded Phil Goff commenting on the same thing, re disappearing developers:

“We’re all fond of kicking Council, saying, ‘This bloody building consent is taking this long and you’re being far too tight’.

“But when you consider that figure… $600 million that Auckland ratepayers have picked up because of leaky buildings; when you consider the builder may have been responsible for the fundamental defects in a property that may have cost 10s of millions of dollars; you try to find that builder today - they’ve gone, they’ve liquidated, they’re nowhere to be seen, and the liability comes back on to Council, because Council is the last person left standing.

“I don’t want to see Council put in that position. I don’t want to see Council being excessively conservative in terms of innovative building methods…

“I’d like to see a system where the builder then had to, through the insurance scheme, take responsibility for their own work. Where the ratepayer is protected and where the consumer gets more protection.

“Obviously nothing comes for free. And if you have a warranty system, the cost of that warranty comes back to the consumer. But rather that than the sorts of costs that have been imposed on Aucklanders as ratepayers and on individuals, where they haven’t been able to get any redress anywhere.”

Goff noted every state in Australia has a warranty and insurance scheme, which generally covers building work over a certain value for a period of six years.

If something like this was introduced in New Zealand, he said it would have to cover a period of at least six years.

Building insurance ?
Good luck seeking a payout Mr Goff
We have a mandatory 7 year new build insurance on all new homes and they won’t allow the stuff you allow in NZ for cladding a house nor will they allow a couple of pipe systems used extensively in NZ
It amazes me why people like Mr Goff would rather choose insurance rather than building properly and banning products we know are extremely leaky

So private developers are choosing to use products they know will leak?

And we should blame the government for this first rather than those creating and selling defective products?

Same here. Its madness to build something right now. Or you can wait until there are plenty of builders sitting around who will sharpen their pencils.

Phil Goff was part of the Lange/Douglas govt which introduced deregulation from a prescriptive building code that worked for decades to leaky homes disaster costing over $23Billion and counting in repairs. The Green Party abhorrence of treated timber pushing for untreated timber framing meant rotting walls once a few drops of water touched timber with no preservative protection. The rush by business interests to push the envelope to save costs and create profit at the expense of standards The government agency BRANZ which approved the use of sub standard products
Today NZ still suffers from the lack of skilled trades people as youths focus shifted to a university degree not a trade qualification Anything built today I guarantee I could find numerous fault The apartment buildings are another sad story that will keep costing owners until the day they’re pulled down or fall over with a decent earthquake

The fact that prices have more than doubled could be the obvious explanation.

As someone who works in and around the urban development industry, this comes as no surprise. I've been alluding to it all year.
The numbers were being kept up by SHA consents, and also Housing NZ.
And by the way - a drop in dwelling consents does not necessarily mean house prices are going to increase - at least in the short term (obviously lower supply has longer term implications). It's not that simple. In fact, a drop away in consents can be a leading indicator of drops in house prices, as developers / builders may be less inclined to build in a falling market.

Fritz I totally agree with your comments
Builders will merely wish to tick over at this time and wait and see where the market is headed

As of approx. 31/10/2017 @ 1245 hrs on Realestate.co.nz there are over 12k Auckland housing listings for sale - which in comparison to around 8 k listings for sale during the peak of the Auckland housing boom. The numbers of sales are decreasing while the number of listings for sale continues to climb higher since the end of winter and election period. There is no housing crisis concerning the supply of houses for sale. There may have been an oversupply of housing investors during the housing boom but capital gains are now disappearing and therefore so have the investors. If there really was a housing shortage, then listings for sale would not be climbing and sales would not be falling away like they are.

We have a surplus of expensive housing. Still, more affordable housing is needed urgently to get more New Zealanders out of rentals and into their own home. However the future pans out - house prices are going to fall either way.

Totally agree that houses in Auckland are expensive / unaffordable and over valued. At 840 k (median Auckland value REINZ) the house price to income ratio is around 9.2 which is too much / unaffordable (https://www.interest.co.nz/property/house-price-income-multiples). One way to reduce that would be to increase supply further but things might take care of itself without building more houses given that there is already a good supply of houses for sale currently. There were only around 1600 sales last month (source REINZ) and with 12k listings means that there could be appox a 7.5 month worth of housing stock waiting for a buyer at present

Don’t panic the new coalition will sort it out as well as reducing child poverty and better education and better health and better everything!
They will be able to create miracles and everything will be roses.
They are a very capable bunch and have plenty of experience and that is why they are our chosen government.

The first step to fixing a problem is admitting you have a problem.

Ocelot, totally agree with you.
This coalition will need to admit they have a problem!
The fact is that all their airey fairy promises they will not be able to keep!
I am telling you now when they are voted out at our next election, they will have created more problems than resolved.
We have not heard of a single idea yet that is productive for the NZ coffers except spend money on stuff with no immediate return

I was referring to National's claims that there's no such thing as a housing crisis, and that unaffordable accommodation is a measure of success.

If Labour are able to deliver on only some of their promises you'll see at least a 3 term left wing government maybe more if it boosts productivity.

Truth is, we needed National's streamlining of planning process, BUT ALSO Labour's more interventionist approach.
The two need not be mutually exclusive.

National's streamlining of planning process

We needed that for the last nine years but because the housing crisis is imaginary we never seemed to get it.

As others have pointed out, the heading could have been "New Dwelling Consents Up 6% on a Year Ago."

Come on Greg Ninness and interest.co.nz, letting yourselves down with this sort of fake news.

Agreed. I like reading interest.co.nz as it gets down to the nitty gritty and providing numbers, but if feels like an extra puzzle asking the reader to sift through unnecessary and misleading information.

I can understand interpreting facts from a buyer / seller / spruiker point of view, but comparing August and September numbers were just largely irrelevant. Can we please have less fake news, more real analysis? Thank you Greg.

Too early to tell how things will play in the housing market ... ! so far indicators are pointing to more of the same shortage driving prices higher, albeit at much slower pace.

However, today's word on the street indicates that we will get used to the New Normal of low offering, low volume, low lending, extreme low demand from market drivers and movers like investors, speculators, foreigners, and buyers hoping that the crash is coming soon !!... House prices of quality and tidy are holding firm, Rents are going up as demand is climbing and expenses piling up -- the market is run by people who have to sell, moving on, or have enough cash to make a move and that is only 40-60% of housing turnover (depending on the area) -- everyone else is sitting on the sidelines.

Banks keep looking for any excuse Not to lend money, try borrowing 100K to renovate your own home add a bedroom or garage ! ....It is a blood-boiling experience ... Hence there is huge difficulty in borrowing to develope old housing stock , let alone build new... so buyers wont touch do-ups either .... this is a vicious circle leading to more shortage in supply and will push Quality / Renovated / Tidy and New house prices higher as we go ...
In time, All the hopeful buyers will come to terms and accept the realistic affordable Unit price of 600 - 650K anywhere around Auckland as the new Government gradually discover and admit how difficult it is to get it lower than that ... a too hard basket case

The New city development idea North of Pukekohe sounds like a great solution.
I say they should Develop New Industrial Zones nearby in Huntly, Mercer, or Meremere etc and connect it with trains or trams to this City while they are at it ... this will encourage industry to expand and move out of Auckland to some cheaper unused land (similar to the expansions in Te Rapa and Horotiu - I hope that the new minister could prove that he is proactive enough in burning red tape and make things happen.

There is no drop in Tasman. As fast as the sections come to market they are snapped up and houses follow them. Tasman is now consenting double that in Nelson city on a rolling annual basis. Tasman is building at the same rate per head of population as Auckland. On Trademe there are now just 87 properties to let out of the 10000+ rentals in Nelson / Tasman. I doubt there will be any Kiwi building in this part of the country.

Gee what a surprise. The arse falls out of the housing market and construction follows closely behind. No profit, no build.

Instead of copy pasting the same article template month after month after month why not do something new like frame it as the "immigration crisis".

Your access to our unique content is free - always has been. But ad revenues are diving so we need your direct support.

Become a supporter

Thanks, I'm already a supporter.