Auckland consents reach 15 year high

Friday 29 June 2018

New dwelling consents in Auckland hit a 15 year high in May but economists are warning that capacity constraints mean actual building levels may not keep pace.

By Miriam Bell

Signs that the SuperCity’s chronic housing supply shortage is starting to be tackled were everywhere this week.

Housing Minister Phil Twyford announced yesterday that the Government’s KiwiBuild programme was officially kicking off with the development of 400 affordable homes in Northcote.

Now Stats NZ have released their latest consent data and it shows that 1,530 new dwellings were consented in Auckland in May.

That’s the highest number of any month since October 2002, Stats NZ construction statistics manager Melissa McKenzie says.

“Almost half the new homes were stand-alone houses, with apartments and townhouses driving growth in recent months.”

Auckland boosted the national consents total in May to 3,407 new dwellings, which was the highest number since June 2004.

Annual consents totals were also up for the year ending May 2018.

Nationally, 32,628 new dwellings were consented which, once seasonally adjusted, was a 6.5% rise on the May 2017 year.

In Auckland, 12,274 new dwellings were consented which, once seasonally adjusted, was a huge 18% year-on-year increase.

Westpac senior economist Satish Ranchhod says May’s surge in consents, driven by Auckland’s increase, was much stronger than they expected

Importantly, annual consent issuance looks like it’s finally breaking higher after trending sideways over the past year, he says.

“Consent issuance in the multiple group (apartments, townhouses) can be lumpy on a month-to-month basis, so we may see some pull back over the coming months.

“However, with a run of large increases, issuance in Auckland is now around levels that are necessary to start gradually addressing the region’s large housing shortage.”

While recent increases in consent issuance are encouraging, the building industry is encountering some powerful headwinds, Ranchhod warns.

These include shortages of skill labour, rising costs and difficulties accessing finance, alongside the slowdown in the housing market.

“This combination of conditions means that actual home building levels may rise more gradually than the pickup in consents implies.”

He adds that the multiple category now accounts for more than half of all new housing consents in Auckland, reflecting the ongoing shift to smaller, higher density housing in the SuperCity.

For ASB senior economist Jane Turner, the strong growth in consent issuance shows that any election-related uncertainty holding back Auckland house building demand has now passed.

Robust building consent issuance suggests some upside to our residential construction forecasts, she says.

“But a key concern is that capacity constraints in the construction sector may hold back activity growth, despite the strong demand.”

Concerns about construction industry capacity constraints have been prominent of late.

In response, the Government this week proposed immigration changes to make it easier for the construction industry to employ workers from overseas.

These include the creation of a temporary “Kiwibuild skills shortage list” and a streamlining of process for employers in this area.

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