New dwelling consents took a dip in December but were up 3.4% for the year

New dwelling consents took a dip in December but were up 3.4% for the year

There is little good news in the latest building conset figures, with the number of new dwellings consented in December down 1.6% compared to December 2016.

Statistics NZ says 2169 new dwellings were consented throughout the country in December, compared to 2205 in December 2016.

The drop was driven by a fall in the number of stand-alone houses and retirement village units consented in December compared to the previous year.

But on an annual basis consents are up, with 31,087 new dwellings consented in the 12 months to December, up 3.4% compared to the previous 12 months.

However the total value of new dwellings consented was up 7.8%  in 2017 compared to 2016, suggesting the cost of new homes is continuing to rise.

That included 3239 new apartment units, the highest number of new apartments consented in a December year since 2004.

There were also 21,022 new stand-alone houses consented (-9.9%), 1951 retirement village units (-9.3%) and 4875 townhouses and flats (+12.2%), suggesting a strong trend towards more intensive housing developments.

In the Auckland region, where the need for additional housing is greatest, 876 new dwellings were consented in December compared to 1450 in November and 740 in December 2016.

It is estimated that at least 1200 new dwellings need to be added to Auckland's housing stock each month just to keep pace with the demand generated by its strong, migration-fuelled population growth.

In other main centres 153 new dwelling consents were issued in the Wellington region in December compared to 115 in December 2016, while consents declined sharply in Canterbury to 298 compared to 413 a year earlier.

The numbers were flat in Otago and significantly down in the Waikato and Bay of Plenty. (see chart below for all the regional figures).

On the commercial property front, consents for $485 million of non-residential building work were issued in December, down 18.5% compared to December 2016.

But on an annual basis, consents for $6.499 billion of non-resdiential building work were issued in 2017, up 8% compared to 2016.

Building consents - residential

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Not sure how the above conclusion about Auckland was reached - but surely not according to the news when you read this here :

" In Auckland, where building supply has failed to keep up with population growth in the nation's largest city, residential consents lifted 8.4 percent to a 13-year high of 10,867.

“Over a third of all new homes in New Zealand were consented in the Auckland region last year, which is in line with Auckland’s share of the New Zealand population,” McKenzie said. “This is the first time since 2004 that the proportion of new homes consented in Auckland exceeded their share of the population.”

Record numbers of retirement village units, townhouses, flats, and other units were consented in Auckland last year. While apartment units were also a significant part of building consents in Auckland in 2017, there were bigger numbers of apartments consented in the early 2000s. Only a quarter of all new stand-alone houses consented in New Zealand were for Auckland."

So ... we are @13 year High in Auckland -- 10867 consents when we need 14760 ( old number from 2016 ... maybe over 15000 required today ) to keep pace with demand ( assuming all consents will be built this year) ...let alone the 40,000 backlog ....this is primarily why house prices are holding and expected to rise by about 3.2% in the next two years according to ANZ consumer survey released today

The continued Lending restraints on new buildings in the last few months might show in reduced consent numbers later this summer as we know about few abandoned projects because of funding and lack of sales. and that is the bad news ...

July 2017 might stay the bottom of market price in Auckland for some time then !!

Time will tell ...

I can believe Auckland's decrease in consents. Even the council will not consent unless a neighbour approves. Come on New Zealand, surely we are past putting the power into a neighbour's hands. Change the law to force the end to this ridiculous show of power over getting worn out stock replaced and your housing shortage in Auckland will no longer exist. In the mean time a large number of New Zealanders are just lining the pockets of lawyers having no rights to build within a council's or city's plan because a neighbour does not want to sign. These cases are just getting worse the more dense the cities become.

I note that the average cost per dwelling in Auckland appears to have dropped by $100,000 in December to $342,000. Compare that with the $424,000 in Waikato. I guess this indicates that lots more tiny cheap apartments are being built. Big drop in Canterbury compared with last year but the year to December date figures are still at 5000. The message must be getting though that Canterbury has a surplus of unsold properties that are not moving. Watch this space in one month's time.

This lack of new building makes very little sense – clearly something is seriously broken.

So I suppose we could hazard a guess that the usual suspects are at play here. Namely chronic skilled labour shortages, rising materials costs, a somewhat subdued market outlook deterring speculative development, tighter lending restrictions and of course the usual stranglehold of bureaucratic redtape compliance. I would wager that these numbers will further flatten despite best intent of governing coalition and from being in a position close to much of Auckland’s development I am already seeing significant urban residential developments across the region facing challenging times when it comes to finding willing buyers. I only hope that Labour is a damn sight smarter than they appear.

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