Consents at 44 year high
Friday 1 March 2019
New dwelling consents are now at the highest level since 1975 but economists say that it’s likely they have reached their peak.
By Miriam Bell
A total of 33,576 new dwellings were consented nationwide in the year ending January 2019, according to the latest data from Stats NZ.
Once seasonally adjusted, this was an increase of 17% in January 2019.
Further, in the month of January 2496 new dwelling consents were issued, which was an increase of 30.3%, as compared to January last year.
Stats NZ construction statistics manager Melissa McKenzie says the number of new homes consented this year is at its highest level since early 1975.
“However, the population was only around three million in the 1970s, compared with nearly five million today.
“That means that while approximately 13 new homes were consented per 1,000 New Zealanders at the 1970s peak, around seven per 1,000 were consented in the year ended January 2019. “
The growth in new dwelling consents was driven by an increase in large multi-unit projects such as apartments, especially in Auckland.
In Auckland alone, 13,272 new dwellings were consented in the year ending January 2019. This was up 20% on the January 2018 year and is at similar levels to the 1970s peak.
This highlights the strength of Auckland construction, which was also illustrated by recent Auckland Council data showing the region saw a record 10,637 dwellings completed in the year to December 2018.
ASB senior economist Jane Turner says house building activity is set to be very strong over the first half of the year in Auckland.
The Stats NZ results are very encouraging from the perspective of Auckland’s underlying housing shortage, she says.
“Although Stats NZ’s new net migration estimates indicate the population growth may not be as high as previously thought, we still believe that Auckland is likely to have an underlying shortage of around 20,000 dwellings.
“We still see this as taking many years for Auckland’s housing supply to catch up to population needs.”
But Turner says Auckland’s housing shortage has spread beyond Auckland and is now resulting in tight housing markets in many of the regions.
“Strong regional population growth has underpinned an increased need for new housing and we expect house building activity to hold up at high levels right across the country over 2019.”
“With housing construction (and other types of construction) at high levels, construction resources are strained and this may limit the growth in housing building activity.”
Westpac senior economist Satish Ranchhod agrees, saying that house building activity has likely reached its peak with consent issuance now running broadly in line with population growth.
“On top of that we’re seeing population growth slow as migration has fallen, and a cooling in the housing market is on the cards over the next few years in response to policy changes.
“Together, those conditions signal a significantly different environment for construction activity than we saw in recent years.”
Beyond 2019 residential construction activity is likely to flatten off or even decline slightly, he adds.
Comments from our readers
No comments yet
Sign In / Register to add your comment
National property values continue to fall with the rate of annual growth dropping from 3.8% in June 2018 to 1.7% in June 2019, the latest REINZ House Price Index reveals.
Flexible working spaces are more than just a fleeting trend and the launch of a new co-working serviced office franchise programme will open up the market to investors.
LVR restrictions on mortgage lending could be a "permanent setting", according to Reserve Bank deputy governor Geoff Bascand.