Consents dip adds to supply worries

The latest Statistic New Zealand data shows that, once seasonally adjusted, the number of new dwellings consented fell by 11% in July.
This partly reversed the 22% spike in consents in June.
In actual terms, 2,811 new dwellings were consented in July, which was a year-on-year drop of 0.5%.

But nine of the country’s 16 regions saw more consents issued in July 2016 than in July 2015 – although most of the increases were modest.

Further, 29,084 new dwellings were consented in the year to July 2016.

This is an increase of 13% from the July 2015 year and is the highest total for a July year since 2004.

Statistics New Zealand business indicators senior manager Neil Kelly said the longer-term trend for housing consents is rising for much of the country – apart from Canterbury.

The trend for new dwellings consented in Auckland appears to be increasing, following a recent tailing off, he said.

However, some economists are concerned about what the latest data means for Auckland.

Westpac industry economist David Norman said the fall in consents in July was not a big surprise following, as it did, June’s large leap.

Auckland’s annual dwelling consents reached 9,622, which is well below the build rate of 13,000 to 14,000 new dwellings per year it is estimated the city needs to address its shortage.

Norman said this figure was also less than one-third of the national total – even though the city accounted for at least half of the country’s population growth over the last year.

“A lot more growth in consents will be needed to begin eating into the housing shortfall of 30,000 dwellings.

“Hopefully, with Council having signed off the Unitary Plan, subject to a final period of limited submissions from the public, Auckland will get on and build.”

ASB economist Daniel Snowden said it was too early to tell whether residential building intentions are resuming a push higher or are heading back to the earlier flatter trend. 

“Against a back drop of strong population growth, a sluggish housing supply response could still add additional pressure to house prices (particularly in Auckland).”

Today’s data follows hot on the heels of last week’s Statistics New Zealand data which emphasised that consents are not keeping pace with population growth.

That data showed that, while the number of new dwellings consented per capita has doubled over the past five years, it is at only half the level seen at the peak of the 1970s building boom.

Six new dwellings were consented for every thousand people living in New Zealand in the year to June 2016.

This was an increase from the low seen in the June 2011 year when only three new homes were consented for every thousand residents.

But the highest number on record was in the June 1974 year when 13 new homes were consented for every thousand residents.

The data also showed that, while New Zealand’s population has grown by 508,000 over the past 10 years, private dwelling stock has grown by an estimated 178,000*.

*This was after accounting for demolitions and consented dwellings that weren’t built.