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.
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