New dwelling consents eased in June but remain higher year-on-year

Property

New dwelling consents slipped in most parts of the country in June but rose strongly in Wellington

31st Jul 18, 11:33am by Greg Ninness

The number of new dwelling consents dropped back in June but remained well up on where they were 12 months ago.

According to Statistics NZ, 2792 new dwelling consents were issued nationally in June, down 18% from the whopping 3407 consents issued in May, but still up 9.1% compared to June last year.

On an annual basis 32,860 new dwelling consents were issued in the 12 months to June, up 7.9% compared to the previous 12 months, and up 75% compared to the 12 months to June 2013 when just 18,783 new homes were consented.

Compared to May, new consents were down for apartments, stand alone houses and retirement units, but up for townhouses and home units.

In the Auckland region where the need for new housing is most acute, 1001 new homes were consented in June, down 35% compared to May but up 10.5% compared to June last year.

That is about 20% less than is needed just to keep pace with the demand for new housing created by the region's migration-driven population growth.

The Wellington region went against the trend, with 389 homes consented in June, up 54% compared to May, and up 44.6% compared to June last year.

That helped take the number of new homes consented in the Wellington region to a record high of 2781 in the 12 months to June, up 29% on the previous 12 months and a record high for any 12 month period since Statistics NZ's records began in 1991.

There was also a big increase Hamilton, where 156 new dwellings were consented in June, up 35.6% compared to May and up 105% compared to June last year.

Consents in Christchurch followed a similar trend to Auckland, with new dwellings consents in June dropping by 27% compared to May but still up 19.4% compared to June 2017.

The figures also show that the construction industry remains a huge driver in the economy, with the value of new dwelling consents issued in the 12 months to June worth $12.13 billion, up 4.2% compared to the previous 12 months.

On top of that another $2.08 billion worth of structural residential addition and alteration work was consented, up 11.3% on the previous 12 months.

The value of non-residential construction, which includes offices, factories, warehouses, hospitals and schools, also took a dip in June, with $530 million of non-residential work consented, down 19.3% compared to May but up 17.5% compared to May last year.

On an annual basis, the value of all construction work (residential and non-residential) was $21.5 billion in the 12 months to June, up 10.7% compared to the previous 12 months.

The interactive chart below plots the regional trends in new dwelling consents on a month by month basis since October 2002.

Building consents - residential

Select chart tabs

Source: Statistics NZ

Building consents - growth

Select chart tabs

Source: Statistics NZ

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23 Comments

by Eco Bird | 31st Jul 18, 12:05pm 1532995520

" In the Auckland region where the need for new housing is most acute, 1001 new homes were consented in June, down 35% compared to May but up 10.5% compared to June last year.
That is about 20% less than is needed just to keep pace with the demand for new housing created by the region's migration-driven population growth. "

Construction costs are up 4.2% compared to the previous 12 months.
( I doubt that this is accurate, my experience shows closer to 7%)

Immigration is not slowing down enough to kerb demand

And DGM still think that prices will fall !!!!!! still pray for rain and thunder!

Well, keep praying and wait for KB ... @4.2% pa construction cost increase, the $650K ceiling will get to over $705K if land prices remain the same in two years ...fast forward to 5 years and you will get the picture!

Best time to buy now...at the bottom of the market.

by Retired-Poppy | 31st Jul 18, 12:15pm 1532996138

Eco Bird, here is the root cause of your naivaties. If you think immigration is the key driver of house prices think again. What about finance availability? Your comment only tells others that your freaking out at the real possibility that 100K Kiwi Builds will succeed in bringing down house prices and rendering many rentals vacant.

by Eco Bird | 31st Jul 18, 12:35pm 1532997337

lol ... no comment ...haha, but you now made my day :)

Only shallow people would believe that 2.5 or 3% of buyers in specific quartiles ( out of the reach of most other buyers) are the drivers of the market ....what about the rest of the buyers who are buying the $1M+ houses in Akl ... are they all immigrants?

You and your Mates are stuck in your thoughts and info, refuse to believe that there are a lot, and I mean A LOT, of middle class well paid Kiwis who upgrade and buy new houses and they have the income to support that ... so get real ! ... just because some people cannot buy expensive houses or dont have the income to support that does not mean that there is no one else ... otherwise house prices would have dropped like a stone by now !!

The fact that house prices are steady to slightly rising means that there is enough support for these prices in the current market...and Auction activities show that too .... even you could understand that RP, I hope.

Read my comment in its entirety , it's not only immigration .. all the fundamentals are pointing to Less Supply and More Demand, and higher renovation and replacement costs ... so price sizzling is no brainer...

you are disconnected from reality RP, 3-4 years back I used to renovate my properties and update them for 20 - 30K, today I do almost the same update for 40-45K+ ... it's fun, you should try it sometime.

by Retired-Poppy | 31st Jul 18, 1:14pm 1532999688

Also, it's funny how when just after one report (MOM) shows consents are down (still up YOY) you spout a house price supportive shortage. Whos plucking to suit his narrative.....????

It's not smart to boast of gains banked. Its even less so to boast alleged gains that aren't even banked. By the time all and sundry got their cut, post sale, there's little/nothing left. Of course you're assuming 2017 CV as your benchmark valuation. Good luck with that or above in this market.

Refurbishment
Maintenance
Rates
Agents
IRD
Insurance

Looking forward after this extraordinary run, it's now safer to assume there are many unpleasant surprises. If in your position you can safely sidestep these, you already have answers and solutions to all the World's problems ;-) The old spruikers argument is, keep forecasting doom and gloom and it will always eventually come. While this is true, people who wind up with the short straw often need more than another working life to recover.

BTW, despite your comment saying otherwise, as already reported, Auckland house prices are now falling.

by BuyLowSellHigh | 31st Jul 18, 1:29pm 1533000555

Auckland house prices are now falling

Auckland median fell by a wopping $6K, from 856K in June 2017 to $850K in June 2018. I'd call this flat.

Upcoming economic slowdown might put a damper on things for next few years, but I'm already looking forward to the recovery in 2021/22.

by Cowpat | 31st Jul 18, 1:31pm 1533000690

Eco Auckland medians have flatlined for two years,how can this happen when the chant of housing shortages remains,what happened to Eco 101.I am struggling with flying pigs at present.

by BuyLowSellHigh | 31st Jul 18, 4:00pm 1533009650

by Eco Bird | 31st Jul 18, 2:24pm 1533003878

No flying pigs,

Apply Eco 101 taking into account ALL market indicators and fundamentals which affect price and the particular behaviour of " the property market " based on history and people's sentiments and investment habits.

Price is only one indicator, The Fact that Median price is flat for two years proves that the current price level is well supported for now , that is Eco 101 ... and the fact that most houses are being sold ( i.e someone was prepared to buy them) at or above 2017 CVs is clear support indicator too.

Eco 101 is not a one size fit all ...

The fact that a $1M new houses was sold in area X in 2016 is now being actually SOLD ( not offered) at $1,2 - 1,3M in the same area ( as it continues to be developed) is more than support and more than flat.

this shows that there is demand at this price point. these are areas like Riverhead, Silverdale, Kumeu and stillwater, Flatbush, and many others in Hamilton and Tauranga.

There is little support for apartment and terrace house prices, hence they are at the same levels and not selling that well due to lack of buyers in this price bracket ( too expensive for most) while more capable people aim for stand alone freehold with a bit of dirt around 800K.

Same story with Old and rundown properties needing work, their support is dwindling and are getting cheaper every month unless they are fully renovated to make them appeal to buyers at a higher price bracket.

So Eco 101 needs to be applied smartly and in context,
Property Investors use more than Eco 101 in making their decision.

by Retired-Poppy | 31st Jul 18, 2:44pm 1533005062

Eco Bird, all properties eventually become old and rundown without the required maintenance. Are you suggesting that over time, support for property as an investment choice will further dwindle under the weight of soaring maintenance costs? Is it viable to renovate and resell or not? If it were, support for such properties would not be dwindling in the first place.

Suggest you get a better grip on what's really going on out there.

by Eco Bird | 31st Jul 18, 2:56pm 1533005807

Thank you , I will get a better grip on what's really going on out there Mate.

seems that I missed a lot while renovating and developing 3 properties in the last 3 years - I was too busy to take notice and get a grip !!

But to answer you question , it is viable to renovate and add value, so it becomes sellable ! ... the difference is huge.

it's beer o'clock - time for a cold one,

by Retired-Poppy | 31st Jul 18, 1:41pm 1533001311

BuyLowsellhigh, it's easy to call -$6K as a flat market, if house prices rose $6000 YOY, you would say it was rising. When adjusted for inflation and its now a trend in place then it's much less trivial. If at today's prices, gross returns minus expenses reveals a loss, with incoming ring fencing combined with declining prices, it's a tough investment strategy to swallow!

by BuyLowSellHigh | 31st Jul 18, 1:51pm 1533001872

But what will the return be in 10 years time, with rents going up faster than inflation and house prices likely to do the same post-slowdown?

by Retired-Poppy | 31st Jul 18, 2:24pm 1533003863

Buylowsellhigh, In some parts of Auckland, rents are falling; https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…

I suggest outside of a global financial catastrophe then, as a best outcome scenario, this weakness could last up to a decade. How else will we revisit safer fundamentals and close this dangerous wealth gap? Landlords are charging what they can get away with now, its capped by limited upside in tenants wages. In the years ahead, I can't see wages rocketing ahead in leaps and bounds - can you? Businesses are struggling now.

by Eco Bird | 31st Jul 18, 2:35pm 1533004533

LOL, sure ! how can a blind person living under a rock see anything?

Your mates are going to dish out billions in wage increase to every public servant in the next 3 years and the min wage is going up YoY to reach $20

the Unions are going to make sure that they suck every available dollar before this CoLs is kicked out in 2020.

You still can't see wages rocketing ahead in leaps and bounds

by BuyLowSellHigh | 31st Jul 18, 4:21pm 1533010903

https://www.interest.co.nz/charts/real-estate/median-price-reinz

Select Auckland and project back to 1992. You think that now is different and this trend is going to change? Extraordinary claims require extraordinary evidence.

by Retired-Poppy | 31st Jul 18, 4:56pm 1533012983

Buylowsellhigh, participating in a race to riches carrying a huge loan on your back while looking in the rear vision mirror, is hardly the business acumen that delivers guaranteed profits. By knowing when the good times have been had then, patiently stepping aside, helps avoid the ugly price of greed.

If you chose to ignore the price others have paid for doing the same thing, you deserve an invite to Eco Birds future pity party.

by Eco Bird | 31st Jul 18, 1:39pm 1533001184

haha.... you still didn't get it huh?

LOL, I am not assuming anything, The entire market, including the banks, are taking 2017 CVs as the current benchmark valuation - you must be living under a rock !

RP, there are ways for banking ( and realising Cash) out of CG and valuation without selling the property and incurring all the costs others usually pay .. but Noobs like yourself who know Shite All about investment and finance ( your words, not mine) have No Clue how to get idle money
to work and produce more apart from putting it in TD and counting the crumbs while losing value ....

So please, don't sound like you know what you are talking about and fool others, because you really don't ...cheers :)

by Retired-Poppy | 31st Jul 18, 2:21pm 1533003719

Eco Bird, obviously I said something that upset you. If by withdrawing equity is your recipe for success in this market, you're an even bigger debt junky than I first thought.

by Eco Bird | 31st Jul 18, 2:48pm 1533005289

I am mate, and make no apologies for that ...who wouldn't take others people money and invest it wisely?

I make money out of equity, I do not borrow at 5.6% and put it in TD to get 3% net after tax ...lol. I usually make around 10% pa Net.

My " business partners" twisted my arm lately and gave me more .. I couldn't let then down, it's not nice, you know.:)

by BuyLowSellHigh | 31st Jul 18, 12:46pm 1532998013

Good that we're seeing more terraced units - I think that this, along with apartments, is the most realistic way to bring down the cost of the average home in the long run.

I still don't know how all these units are going to be built though - it is exceedingly difficult to get finance at the moment. A consented unit does not equate to a constructed unit.

by The Person | 31st Jul 18, 1:57pm 1533002238

I don't think apartments are cheaper to build than standalone houses. It's just that you can build them in places where people want to live. It brings down total lifestyle costs as your transport costs are reduced, but the $/sqm for building are higher, usually more than enough to offset the small share of land cost.

by BuyLowSellHigh | 31st Jul 18, 3:40pm 1533008419

Land is a significant component of the overall cost of delivering a residential unit. By building more units on less land, this cost is heavily reduced and cheaper homes can be delivered. No doubt that construction cost/sqm is higher for an apartment. Construction cost/sqm for a two story terraced unit is probably comparable to a stand alone dwelling.

The floor area for terraced units and apartments is also typically smaller than stand alone dwellings with the same number of bedrooms. This is another reason overall cost is less.

Land savings more than offset the higher construction cost. This is the main reason you can buy a 3 bedroom apartment for $1M - 1.5M in Ponsonby, but the stand alone house next door is $2M - 3.5M.

1/2 Collingwood Street is a 3 bed 154sqm unit (complex of 10) costing $1.4M. Only a few metres away is 14 Collingwood Street, a stand alone 3 bed house of 144sqm costing 2.3M.

by The Person | 31st Jul 18, 1:54pm 1533002080

2.5 months now and auckland council still hasn't started processing my building consent. Expect the numbers to stay high with this level of backlog.