Falling consent woes

Thursday 9 February 2017

Building consents fell sharply nationwide in December – but it is the slowing consent trend in Auckland which is of greatest concern, according to economists.

By Miriam Bell

The latest Statistics New Zealand consent data shows that, once seasonally adjusted, the number of new consents issued fell by 7.2% (to 2,215) in December.

This followed a 9.6% fall in new consents in November.

Overall, the trend for new consents has been declining after reaching a 12-year high in mid-2016. In the last five months of 2016, it fell by 12%.

While the declining trend is largely being driven by Canterbury as the Christchurch rebuild continues to tail off, a drop in apartment consents has also contributed to the decline.

Despite this, the total number of houses consented in the year to December was up 10% (to 29,970) and the most for a calendar year since 2004.

Auckland was the region that consented most new houses in the year to December 2016.  With 9,930 new consents issued, there was a 7% increase on 2015.

However, consents in the Super City fell sharply in December. They were down to 740 as compared to 1,156 in November.

Any decline in consents is of concern – given the region’s supercharged population growth and ongoing supply woes.

Westpac senior economist Satish Ranchhod said the weakness in consent issuance was really an upper North Island story, with most of the weakness centred on Auckland

In seasonally adjusted terms, residential consent issuance in Auckland fell almost 10% in December, continuing the steady decline seen since mid-year, he said.

“Notably, consent issuance in Auckland has now dropped below 10,000 on an annual basis - well short of the levels needed to address the needs of population growth in the city.”

It is generally estimated that Auckland needs between 11,000 and 13,000 new dwellings built every year for the next decade to address its shortage and keep up with demand.

Ranchhod said some of the weakness in Auckland consents may reflect uncertainty around the implementation of the Unitary Plan.

“This is an area that will warrant close attention over the coming months.”

But he added that, on an annual basis, national consent issuance is still up around 19% - although the data raised the risk of the pace of homebuilding slowing down in early 2017.

For ASB senior economist Jane Turner the data showed that the trend in housing consent issuance is now declining, with consents falling for the second consecutive month in December.

The fall in December was largely due to fewer apartment consents, which are lumpy and often cause volatility on monthly basis, she said.

“However, on trend basis, overall consent issuance is now falling, led by a decline in stand-alone house consents.”

Canterbury is the key driver of this decline, but it is the weakness in Auckland and Wellington consent demand that is concerning given existing supply shortages, Turner said.

“Strong population growth over the past few years has lifted housing demand in many parts of the country, and we expect momentum to continue at least for another year.”

She added that, in the case of Wellington, it may be that recent earthquake disruption is temporarily weighing on demand for (stand-alone) housing consents.

The data comes on a day when the Reserve Bank governor Graeme Wheeler again emphasised that supply is key to resolving the issues connected with the housing market.

Read more:

Supply is key to boom end 

Forget demand – address supply 

Comments from our readers

On 10 February 2017 at 11:29 am pjmoon@wisp.net.nz said:
Australia encourages new builds with a First Home Owner Grant General Information The First Home Owner Grant (FHOG) scheme was introduced on 1 July 2000 to offset the effect of the GST on home ownership. NZ $700,000 new L&B build has $105,000 GST (if it is built) No GST if not built ​The following are Northern Territory Government and Commonwealth schemes designed to assist home ownership: First Home Owner Grant – $26 000 grant for first home buyers purchasing or building a new home Household Goods Grant Scheme – a grant of up to $2000 for the purchase of household goods for eligible recipients of the First Home Owners Grant First Home Owner Discount – up to $23 928.60 in stamp duty relief for first home buyers purchasing an established home valued up to $650 000 Principal Place of Residence Rebate – $7000 in stamp duty relief for non-first home buyers purchasing or building a new home Senior, Pensioner and Carer Concession – $10 000 in stamp duty relief for senior citizens (age 60+) or pensioners or carers holding a Northern Territory Pensioner and Carer Concession card​​​ HomeBuild – low deposit home loan options to assist in purchasing or building a new home (means and asset tests apply)​ Home Renovation Grant - a $10 000 Home Renovation Grant for eligible recipients of the stamp duty First Home Owner Discount

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