Consents trending down

Statistics New Zealand’s latest data shows that, nationally, the trend for the number of new dwellings consented decreased 15% in the five months to January 2017.

This comes after the consent trend reached a 12-year high in August 2016.

While the seasonally adjusted number of new homes consented rose 0.8% in January this followed falls of 7.9% in December and 8.9% in November 2016.

Statistics New Zealand business indicators senior manager Neil Kelly said the trend excludes monthly volatility to give a clearer picture of underlying changes in home building intentions.

“Most regions appear to have contributed to the recent decrease in residential consents, although Canterbury is the most significant contributor, followed by Auckland,” he said.

“However, building consents are quite volatile at a regional level.

“Canterbury is showing a sustained decrease from its post-quake peak, whereas Auckland is still close to a 12-year high and is now consenting over 10,000 homes a year.”

To confuse matters, in actual terms 1,752 new dwellings were consented in January (up 3.4% from January 2016) while 30,123 were consented in the year ending January 2017 (up 11% year-on-year).

Further, the declining consent trend was not reflected in the latest building activity data.

This showed that residential building work increased by 1.1% in the December 2016 quarter – although it was the smallest increase in six quarters.

ASB senior economist Jane Turner said today’s Statistics New Zealand data shows the growth in consents has stalled, with the number of residential consents now 1.7% below year-ago levels. 

“In light of continued supply shortages, particularly in Auckland and Wellington, this trend of falling consents is disappointing.

“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.”

Westpac senior economist Satish Ranchhod was also concerned about the drop-off in consents, particularly in Auckland.

Housing consent issuance in Auckland is continuing to languish at levels lower than what is required to keep up with the needs of population growth, he said.

“Consent numbers in Auckland dropped back 0.7% over January – the sixth decline in the past seven months and, over the past year, just over 10,000 new dwellings were consented in Auckland.

“To keep up with population growth and address the existing shortfall, Auckland needs to build upwards of 11,000 dwellings a year. And even then, it will require around a decade of strong building activity.”

Read more:

Fears over building industry capacity 

Supply is key to boom end