Residential consents fade

Property

The level of dwelling building consents issued in November was disappointingly tame, and fell noticeably in Auckland. Consents for other types of buildings rise strongly however

11th Jan 19, 11:29am by David Chaston

The number of building consents for residential dwellings in November was a disappointing 3,120.

That is -4.4% less than for November 2017.

In Auckland, 1,172 dwelling consents were issues, -19% less than the same month a year ago. While the trend over the past eight years is still rising in the Queen City, it has turned lower in the past eight months. This will worry senior officials, both in the City and in Wellington.

There are however, good increases being recorded in the lower half of the North Island, especially in the Wellington and Manawatu regions.

New consents for house builds is remaining solid but unspectacular with little growth. Good growth is still being seen for townhouses however. But consents for apartments are at low levels and volatile, while those for retirement units are still healthy.

In the year to November, there were 32,783 dwelling consents issued, +5.3% than the 31,123 in the same year to November 2017. For Auckland, the change on this basis was +19% which puts the November month fall-off into stark perspective. And it seems unlikely that there will be much of a recovery for some time yet as December, January and February are typically low-issuance months.

The value of consents for alterations and additions remained at about $165 mln, less than for November 2017, but at about the same as November 2016.

However, building consents for big commercial buildings, including shopping malls and convention centres, increased strongly in the year ended November 2018, Stats NZ said.

The value of building consents issued for shops, restaurants, and bars; social and cultural buildings; factories; and farm buildings all increased between $100 mln and $300 mln over the period.

“An increase in the intention to build more shops and social buildings was partly due to large consents for Auckland and Christchurch convention centres, and shopping malls in Auckland,” construction statistics manager Melissa McKenzie said.

“Construction costs rise each year, but even accounting for price rises, there was a significant increase in the value of shops and social buildings consented in the year ended November.”

Non-residential consents issued exceeded $7 billion for the first time on record in the year ended November 2018.

Building consents - type

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Source: Statistics NZ

Building consents - residential

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Source: Statistics NZ

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69 Comments

by JimboJones | 11th Jan 19, 11:51am 1547160670

If market driven building levels dry up it makes Kiwibuild even more important. They typical anti Kiwibuild arguments will no longer apply.

by Pragmatist | 11th Jan 19, 12:32pm 1547163175

I hope like hell Twyford & co has the sense not to sign up anymore KB contracts until we see where the market is going. Otherwise the tax payer might well end up on the hook for another few thousand KB houses signed up at todays prices, and having to sell at tomorrows prices, which could well be 20% down by the time the houses are built in a few years if things turn to custard.. which is looking increasingly likely.

I bet there is a stampede of developers trying to get KB contracts signed up before MBIE/Twyford catches on to what might be about to happen. Currently 134 listings on realestate.co.nz for the Hobsonville area, and not all the unsold properties up there are listed.

Sadly, I suspect Twyford doesn't have a clue.

by THE MAN 2 | 11th Jan 19, 12:58pm 1547164719

Of coursecTwyford hasn’t got a clue!
His smug look on his face is going to be totally gone very shortly, as he is proven that he really shouldn’t be holding any portfolio!,

by JimboJones | 11th Jan 19, 3:28pm 1547173684

I hear what you're saying but its the kind of argument that got us into this mess in the first place. We need to be building houses all of the time, not just when the market/economy is going well.

by Pragmatist | 11th Jan 19, 3:31pm 1547173904

And end up building houses for no-body to live in.. paid for by the taxpayer at inflated prices?

by JimboJones | 11th Jan 19, 3:38pm 1547174315

That is the risk I think the government needs to take.
It is unlikely that house prices will fall significantly below the cost of building.

by Pragmatist | 11th Jan 19, 3:50pm 1547175019

They are no-where near falling below the cost of building, its the cost of the land and the paperwork that is the problem.. See Foyles post below.

by Roger Witherspoon | 11th Jan 19, 4:03pm 1547175828

Shane Jones voter bribery fund could subsidise 10,000 homes a year to the tune of $100,000 each. Far better spent on keeping house building going. So plenty of munny for Kiwibuild if they can get it to work. I think Labour were quite crafty to guarantee new build contracts rather than trying to set up a government building department.

The problem is Kiwibuild is only a feel good patch up job unless they reduce immigration to well below the supply rate of new housing and scrap over regulation of the wrong things.

by Pragmatist | 11th Jan 19, 4:07pm 1547176042

Why? Why build (at taxpayer expense) more houses than we have people for. I was looking for sources on how the "housing shortage" is being calculated, and stumbled across this paper:
https://www.westpac.co.nz/assets/Business/Economic-Updates/2018/Bulleti…

which contains this bit of text

Strong population growth and relatively low levels of home
building in recent years have seen the housing shortage in
our largest city rising to acute levels. For every 1,000 people
in Auckland there are now around 320 houses. That’s down
from 340 in 2013, and is a far cry from other parts of the
country, where there are around 430 homes for every
1,000 people.

The bolded section works out to 3.1 ppl/per house on average. That doesn't seem like a huge overcrowding problem to me, unless there are a whole lot more single bedroom units and apartments than I think there is. I would love to see figures on how many bedrooms are actually extant in Auckland compared to the number of people.

by nymad | 11th Jan 19, 4:23pm 1547177030

Exactly.
The 'underlying' housing shortage exists only when assumptions are made about occupancy rate.
Aging and low birth rates of the incumbent population result in lower occupancy rates which are then interpolated across population growth of vastly different demographic characteristics.

Roll on the Census '18 and the abolishing of the underlying housing shortage when the average occupancy rate is updated.

by Pragmatist | 11th Jan 19, 6:46pm 1547185617

After looking at some data for other developed nations/states, 3.1 per household is actually quite high.

Almost as high as Utah, which has the highest statewide average at 3.19ppl/dwelling, with the large Mormon families, one county in Utah gets as high as 4.24 ppl/household, (https://www.heraldextra.com/news/local/which-utah-county-cities-have-th…) but US nationwide average is 2.64, Australia is about the same.

I still suspect if you looked at total ppl/bedroom in Auckland you'd find the result was less than 1.5, given the number of couples or even singles occupying 3+ bedroom houses.

by nymad | 11th Jan 19, 6:52pm 1547185958

How about the countries where all our migrants are coming from?
I reckon ~2.7 is about right for a rich western nation. However, the cynic in me thinks that's maybe not the case in China, India and the Philippines..

by Pragmatist | 11th Jan 19, 7:57pm 1547189861

Does it matter? We don't want to import those living standards do we?

by nymad | 11th Jan 19, 8:15pm 1547190951

The point is that's what we have been importing.

by RickStrauss | 11th Jan 19, 4:11pm 1547176279

The taxpayer has subsidised housing supply for a long, long time. That's one reason why NZ achieved a high rate of home ownership that it once had. Not just "own two feet" at all.

by Pragmatist | 11th Jan 19, 4:23pm 1547177016

Not in this fashion. If the state wants to build houses, they should build them, own them, and rent them out directly and eliminate the ongoing expense of accommodation supplements being funneled in to private landlords pockets, Not subsidise developers to build houses for middle or better income earning people.

by Houseworks | 11th Jan 19, 9:39pm 1547195978

Yes the govt can own ... and rent to beneficiaries for minimal income related rent which is indirectly the same or worse than the AS subsidy amount. Plus ... bear all of the costs of ownership including, management, maintenance and council rates, so it's cheaper and less responsibility on housing nz. Probably the only reason for the state to have to build and own itself is that under this govt investors are not buying new homes to let...pigeons coming home to roost.

by Pragmatist | 11th Jan 19, 10:26pm 1547198762

"Yes the govt can own ... and rent to beneficiaries for minimal income related rent which is indirectly the same or worse than the AS subsidy amount. Plus ... bear all of the costs of ownership including, management, maintenance and council rates, so it's cheaper and less responsibility on housing nz."

They already do this (except rates?) with the housing nz homes that are leased from private landlords (like this one).. so its exactly the same, but without paying rent to a private landlord.

So yes, it would be a huge improvement. Time to end the landlord welfare gravy train.

by Houseworks | 12th Jan 19, 10:12am 1547241164

Time to end the landlord welfare gravy train."
What a joke, you're so anti-landlord you cant think straight pragmatist haha. HNZ are paying market rent or therabouts to the private owners they lease off ... you do realise? And they are making a loss on the income related rent they receive. Probably hundreds per week so that would be more than the AS. Cant you see that or are you so biased to think your tax money is not being used as a rent subsidy. And yes HNZ still have to pay for repairs and management costs. But not the capital outlay so it might actually work out cheaper for them.

by Pragmatist | 12th Jan 19, 9:42am 1547239328

Well duh, that's exactly the problem, far better for HNZ to own the properties in the long run.

And yes, I'm anti-welfare queen landlords, and slumlords that bitch about having to provide housing that meets what is really a fairly low minimum standard.

by Kate | 12th Jan 19, 10:00am 1547240419

I'm with you on this one. Given the shortage of HNZ properties, they should be buying the properties like the one you linked to. The need isn't going to go away - from what I've read wait lists just keep increasing and add to that a 'wave' of non-home-owning new retirees that are coming into the frame now and in the future.

by Houseworks | 12th Jan 19, 10:25am 1547241945

Hi Kate you're right about some retirees without a home of their own. This is a problem already now with baby boomers who are the so called blessed generation. What will the "problem" be in future with younger generations, I think worse and that's an issue for govt. Perhaps KB will help solve that but many commenters say to scrap it

by KH | 12th Jan 19, 11:06am 1547244410

There is a term for what faces folk who are retiring and still renting. Called "the income cliff" Not many options then other than putting a plastic bag over your head.

by Nzdan | 12th Jan 19, 11:48am 1547246891

Well they've had decades to get their affairs in order. Everyone is very quick to feel sorry for the older folk paying market rent. Maybe they too should try cutting back on smashed avo on toast, or plead with their peers to give them a SuperGold Card discount on their rent.

by Carlos67 | 14th Jan 19, 9:24am 1547411078

I suggest you look at the facts when you retire. If you have less than $236K in assets you can go into a retirement home and the government pays for all of it. If you have more then your paying for half of it which is about $1000 a week until you drop below the threshold. Amazingly in the rest home my father was in, 2 out of 3 people had the government paying for all of it. Of course not everyone wants to go into a home and if the government is paying I'm not sure you get a choice of what home your going into. Don't make the mistake of thinking a rest home is some sort of luxury resort, its a "Last Resort".

by Pragmatist | 12th Jan 19, 10:48am 1547243301

I'd prefer HNZ didn't buy exist fairly low quality housing (although that one doesn't look too bad) and at low density, but the money being funnelled into KB (welfare for developers and relatively high earning people) was instead used to build new quality housing at reasonably high density (~20 cookie cutter builds, and economy of scale should kick in).

by Kate | 12th Jan 19, 11:43am 1547246626

Agree, HNZ should not buy low quality - and there's a lot of it out there! 1970s brick/tile builds are a good/safe decade to my mind. And yes, in many ways I'd rather see KB money put into HNZ tenancy/builds..

by Houseworks | 12th Jan 19, 1:21pm 1547252473

"1970s brick/tile builds are a good/safe decade to my mind"

....yes 1970s housing, large sections and before leaky builds...80s to 2004 monoclad plaster homes direct fixed to untreated framing. Although no insulation in the 70s so personally I would rather have a new build even if it means paying more

by Dale Smith | 12th Jan 19, 12:20pm 1547248819

Which means that shouldn't be buying anything. Even the new builds are low quality. Rentals should be built to a higher 'commercial' stand due to there increased wear and tear.

by Pragmatist | 12th Jan 19, 12:30pm 1547249420

A family living in a rental house has increased wear and tear over the same family living in a house it owns? yeah, Nah.

Lower quality as in not insulated, not double glazed, wired to 1970s standards etc.

by stuart786786 | 12th Jan 19, 5:32pm 1547267536

For all investors and FHB

https://www.propertyinvestorcentre.co.nz/the-boom-is-over/

by taimaiakka0 | 11th Jan 19, 12:01pm 1547161291

Wait and Watch.

Anyone in housing market for long term is fine - can manage but all others should worry specially if does not have holding capicity.

by Foyle | 11th Jan 19, 12:09pm 1547161745

kiwibuild is a bad solution to a problem that is created by excessive regulatory costs. Central and Local govt have made it too expensive to subdivide, gain consents and build and given the sky high cost of building - barely able to compete with existing house prices - it is unsurprising that people are shelving plans to do so in wake of falling house prices (in Auckland at least) and concern over future trajectory of house prices. Building is only marginally profitable now, a 10% drop would be calamitous to those taking the risk on developments.

Govt could solve this problem by rolling back regulatory and govt imposed costs regime by (inflation indexed) 20-30 years and not accepting any liability for future house build issues - should be entirely Caveat Emptor.

It is very hard to keep bureaucratic growth and empire building in check, particularly when they are able to exploit their monopolies to power that growth. We need to elect politicians who fervently believe in smaller govt and less regulation. Ie not Greens or Labour, particularly at local govt level.

by bilbo | 11th Jan 19, 1:01pm 1547164919

Completely agree but there are sadly too many snouts in the trough. Don't expect the councils or any of the politicians to sort it out. They're either land bankers, landlords, outright corrupt or too inept to do anything but add more complexity.

1) Firstly how does NZ have a shortage of residential zoned land on when we have a population density a fraction of similar sized countries like UK or Japan. There are more sheep than people. No taxes for hoarding land, huge legal barriers and costs for developing land.

2) Then you've got all the consenting costs for the dwelling. Mine was $8000 for a single story house! The council inspections were a joke as they missed obvious flaws. She'll be right mate it only has to stay dry for 10 years.

3) Then you've got the govt protecting poor little Fletchers/Carters - "NZ conditions". See if someone imports some lovely warm tilt and turn windows from Poland they might not work here - see they have no rain or wind in Poland and everything is made out of gingerbread there - in NZ we use soft balsa-wood aka young pinus radiata much better than gingerbread.

4) Finally when you have the land, consent, and materials on site there is a theater of scaffolding, safety nets and safety consultants to employ.

by JimboJones | 11th Jan 19, 3:36pm 1547174178

Smaller government? What did National do in their 9 years to cut building regulations? And ACT are definitely not keen on relaxing planning laws - someone might build some hideous apartments in Epsom!
I imagine the right have more rich mates to protect than the left...

by GV 27 | 11th Jan 19, 3:39pm 1547174344

Epsom is surprisingly dense already. The high land prices have provided a pretty major incentive to subdivide and a lot of houses were there before boundary distances became a thing. But whatever, don't let it get in the way of a good ill-informed rant.

by Pragmatist | 11th Jan 19, 3:44pm 1547174656

"Epsom is surprisingly dense already"

I know, they tell us every 3 years when they vote for ACT :)

by JimboJones | 11th Jan 19, 3:52pm 1547175130

A very high proportion of Epsom is stand alone houses on large sections which I would call surprisingly sparse given its proximity to the city and Newmarket.
If ACT were true to their small government mantra then their housing policy would allow anyone to build anything anywhere. But they don't advocate for that because they only believe in small government when it suits them.

by Fritz | 11th Jan 19, 6:19pm 1547183993

Quite true

by bilbo | 11th Jan 19, 12:16pm 1547162201

Oh Dear...
Car sales down
Truck-o-meter down
House prices down in Auckland/Christchurch
Equities down
Dollar down

My prediction: Labour & NZ First are going to deliver some more GDP growth; The kind of GDP growth that has two legs and a chef visa. Which is the opposite of what labourers want and puts NZ last.

by Ngrrk | 11th Jan 19, 2:20pm 1547169621

If they do they will certainly be a one term govt.

by Nic Johnson | 11th Jan 19, 9:29pm 1547195364

Q4 GDP which we’ll hear about in March will be the last positive set of numbers. Q1 and Q2 data (reported in June and September will both be negative).

Credit growth has flatlined and just a small decline in the rate of credit growth ends GDP growth. Nearly 70% of all lending going to property (mortgages/construction/commercial lending) - as Adrian Orr suggested in his last speech - we need people ‘to step up and borrow!’ Now where are Double GZ and Ecobird when you need them?

by Nzdan | 12th Jan 19, 9:37am 1547239064

Eco Bird was banned from this site.

by bilbo | 15th Jan 19, 11:35am 1547505358

Nic I thought you'd been banned by our own little Zuckerburg.

by rastus1 | 15th Jan 19, 11:48am 1547506092

..that would be a concern.

by THE MAN 2 | 11th Jan 19, 1:01pm 1547164877

ChCh property prices are not down at all!,
Read the stats correctly and you will find that they are more than holding their own a,
A lot of first home buyers are getting in now while they can, as prices are going to go gangbusters in the next few years as iT continues to grow!

by bilbo | 11th Jan 19, 1:09pm 1547165370

What a joker. Page 54 of the latest REINZ report. Christchurch down 2.1% over the last 12 months.

I also moved out of a rental I had lived in for 3 years with no rent raises. It was vacant for a few weeks and the price dropped 6%!

by saving4AUhouse | 11th Jan 19, 2:01pm 1547168469

What a joker. Page 54 of the latest REINZ report. Christchurch down 2.1% over the last 12 months.

I remember in the last thread he didn't understand what risk was. Now he literally can't tell the difference between positive and negative numbers.

At this point I am questioning whether he'd be able to recognise himself in a mirror, or whether he'll think that's another, rival property investor he has to scare off.

by Pragmatist | 11th Jan 19, 1:11pm 1547165516

Sure, you go tell the REINZ and the ReserveBank that the HPI they developed is wrong. Please get it on video, I could use a laugh.

Canterbury and Ashburton HPI are still below their (mid?) 2016 peaks, but both look to be gaining very slightly again, but any drop next month and that trend will likely be gone.

by Nzdan | 11th Jan 19, 1:14pm 1547165659

They're definitely down. You're the only one disputing it. I don't think your Skinhead tenants are rushing out to buy a house any time soon.

by PatrickW | 11th Jan 19, 2:37pm 1547170621

Expect at 1% cut in the OCR to historical low of .75%.
Oh my....

by Foyle | 11th Jan 19, 4:24pm 1547177090

So we had steady climb in consents during Nationals term from about 1000/month to 3000/month (after it had fallen off badly through Labour's tenure). That is an average increase per year of about 2500 more consents. But now under Coalition it has stopped growing, or perhaps started to fall. What good is kiwibuild if Coalition's policies see a reduction in total build rate that is far greater than what kiwibuild adds (which after more than a year in office is only 100!!!, 1% of the election promised 10000/year average over 10 years that after a year of inaction has now climbed to 11100/year over 9 years)

Kiwibuild is nothing but an expensive and silly sideshow to the realities of getting enough houses built in NZ. The governments needs to fix the real problems preventing house building which are almost entirely regulatory.

by JimboJones | 11th Jan 19, 4:04pm 1547175881

I agree that the government does need to remove almost all building regulations and council planning powers - and I'm sure they are looking into that to some extent. But keep in mind that National did not remove any building regulation to my knowledge in their 9 years (unless you count the SHAs). So to imply that the right wing would do a better job is just plain wrong.

by Foyle | 11th Jan 19, 4:41pm 1547178088

There was an attempt at RMA reform that was killed by Dunne if I recall correctly. I don't disagree that National squandered a chance to fix things and in fact went badly backwards in areas like health and safety - when you see the number of cone monkeys and clipboard toting Safety Elves in attendance at any construction site the issue is now obvious, but back in 2008-2011 the problem (slow bureaucrat created regulatory creep) wasn't apparent, and prices and costs only started to skyrocket in their 2nd and 3rd terms where they were more beholden to Maori and Dunne for support.

It seems to me that local governments and the costs they are creating and imposing for housing are subject to a terminal amount of management capture and arse covering behaviour. Reform in those areas can only come from central govt, and it is sorely needed.

by PocketAces | 12th Jan 19, 10:15am 1547241329

Leaky homes version 2, anyone?

by nymad | 11th Jan 19, 4:32pm 1547177536

Wow, Folly.
It's almost as if it is cyclical and caused by something, huh!
I wonder what things it might be most highly correlated with and which way causality flows...

I'll let you have a ponder and see if you can find a more appropriate cyclical factor than the election win/loss of the National Party.

by Fritz | 11th Jan 19, 6:25pm 1547184328

So house building is falling because the coalition is in power? How do you prove that? They might have had a role, but probably far more likely it is market fluctuations.

by PocketAces | 12th Jan 19, 10:19am 1547241577

Market fluctuations around the world, which has, curiously, heaved to the right, politically, by and large.

by Paradoxx | 11th Jan 19, 4:42pm 1547178149

Building costs in NZ are out of control relative to other parts of the world, then add 15% tax to the government for the penance to own your abode. Layer on top of that a difficult consenting process and people wonder why consents are down and there is a housing shortage? #Insanity

by Nic Johnson | 11th Jan 19, 9:17pm 1547194665

I wonder if the thousands of empty/unsold new builds sitting all over Auckland has anything to do with this? Ireland 2.0 on the way.. I see reports of Chinese builders being laid off and made homeless in Stuff today. Are they going to be the Equivalent of Ireland’s Eastern European builders? Work dried up, credit bubble pooped and the builders shipped out exacerbating the oversupply!

Immigration NZ reviewing visas of Chinese builders after claims of exploitation.

by The_4th_estate | 11th Jan 19, 10:28pm 1547198927

Its fiscal lag. The effect of raising the investor deposit reqs back in Nationals last term are finally starting to take hold. Shows you how much money was in play for it to take this long for activity to start tapering off

by The_4th_estate | 11th Jan 19, 10:28pm 1547198929

by Brock Landers | 12th Jan 19, 12:25am 1547205947

Maybe nobody wants to pay 1.2 million for the terraced shitboxes being built in the back blocks of Whenuapai? Colour me suprised.

by PropertyPrices2Fall | 12th Jan 19, 7:52am 1547232726

Yoy still well up.. not sure what the panic is about.. housing market has changed.. builders now have to adapt to building more realistic type of houses, get used to make less profit per house and now more houses will be built after securing a buyer , as the good ole days of building any shilte and still getting a sale has well gone..

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…

Welcome 2019

Property prices will keep falling...

by Malarkey | 12th Jan 19, 11:15am 1547244945

You should all be snapping up investment property in Australia. Now is the time to get onto the Aussie property ladder! Quick, before it's too late! Because ya can't lose with houses! Mate.

by Nzdan | 12th Jan 19, 11:58am 1547247534

Wonder what Kate and Matt Moloney are up to these days. Or 70 year old John Norris from Bricks and Slaughter 2.

by Voiceofreason | 12th Jan 19, 1:39pm 1547253557

Consents are still pretty high, and the housing shortage in Auckland isn't real. There is a bubble and an inequality crisis, not a shortage. After looking into it more, the current NZ situation is looking like Ireland before their market crashed, which is concerning indeed.

by stuart786786 | 12th Jan 19, 5:31pm 1547267470

For all Investors and FHB

https://www.propertyinvestorcentre.co.nz/the-boom-is-over/

If correct, will be opportunity for all FHB in near future.

by Carlos67 | 14th Jan 19, 9:30am 1547411452

Commercial construction still booming, there is an all time record number of cranes in the Auckland CBD. Noticeably more commercial going on in Silverdale all of a sudden, cannot possibly be all retail can it ?