Flat consents add to Akld supply woes

The latest data from Statistics New Zealand shows that October saw a small increase in the number of dwellings consented in Auckland.

In October, 875 dwelling consents were issued, which was up 0.4% on the 871 consents issued in September.

Statistics New Zealand business indicators senior manager Neil Kelly said one-third of the homes consented over the past year were in Auckland.

“That’s almost 10,000, compared with 9,000 in the previous year.”

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

ASB senior economist Jane Turner said the flattening trend in Auckland residential consent issuance is disappointing in light of ongoing shortages and continued strong population growth. 

“It is possible ongoing uncertainty for developers due to legal challenges to the Unitary Plan could be holding back the applications of new builds,” she said.

“In addition, many developers are citing rising construction costs in Auckland as eroding margins and developer profitability on new builds.”

But an ongoing sluggish housing supply response could still add additional pressure to house prices, Turner said.

Westpac senior economist Satish Ranchhod was also concerned that consent issuance in Auckland has been fairly flat.

“With 9,950 new homes consented over the past year, building in Auckland is still failing to keep up with population growth.”

Overall, the Statistics New Zealand data shows that, in the year ended October 2016, the annual number of dwellings consented passed 30,000 for the first time in 11 years.

This is over twice the amount consented in 2011 when consents reached a 60 year low.

But it is still 10,000 fewer than the all-time high of 40,000 in early 1974 and 3,000 fewer than the 29-year high in mid-2004.

In October 2016, 2,575 new dwellings were consented nationally which, once seasonally adjusted, was a 2.6% increase on September.

Despite some recent rises, the overall trend is showing signs of flattening.

Turner said construction activity remains a key driving force of New Zealand’s economic growth. 

As such slowing momentum in consent growth is of some concern, she said.

“But trend growth in residential building consents appears to be slowing, led by falling consents in Canterbury and a flattening in Auckland consent growth.

“Consent demand remains strong in Wellington, however, with consents for both housing and apartments lifting strongly in October.”