Covid-19 fog hangs over consents increase

New dwelling consents were up by 20% year-on-year in June. That’s a big increase but it doesn’t allay the concerns of economists going forward.

Thursday, July 30th 2020

There were 3,477 new dwellings consents issued in June, which was an increase of 20% on the number issued in June 2019, according to Stats NZ’s latest data.

While there was a mere 0.5% rise in consents from May, annual consents for the June 2020 year ticked up to 37,614 – which means issuance remains at record levels.

Stats NZ acting construction indicators manager Dave Adair says while there was a fall in consents in April during alert level four lockdown, it was followed by a high number of consents in May and June.

But currently there is uncertainty around consent numbers due to the wide-ranging implications of Covid-19.

"Although many new homes are built within a year of gaining consent… we will have to wait before any changes to the actual supply of homes are noticeable, including insights into completion rates."

While June’s strength in consent issuance impressed economists, they also remain concerned about the uncertainties surrounding the construction industry going forward.

Westpac senior economist Satish Ranchhod says consents are running at levels not seen since the 1970s – and that is even more impressive given the disruptions to consent processing since in the level four lockdown.

“Looking across regions, consent issuance in Auckland remains strong with 14,780 new dwellings consented over the past year. That pace of issuance will allow home building in Auckland to catch up with the strong growth in its population in recent years.”

With a large number of new dwellings being consented over the past year, he expects that residential construction levels will remain firm through the back half of the year. Increased spending on home renovations will also help to support employment in the building sector, Ranchhod says.

“However, as we look to the year ahead, we expect that uncertainty around the outlook will see fewer new housing projects being consented. That trend will be reinforced by the sharp downturn in net migration and population growth already in train.”

For ASB senior economist Mark Smith, it will take several more months for the Covid-19 fog to clear - but, in underlying terms, regional consent issuance looks to have held up well, all things considered.

Over the coming months, he expects construction activity to pick up to complete projects which were underway prior to the lock down and to address a sizeable pipeline of consented work that needs to be done.

“Further ahead, the deep recession for 2020 (we expect a 5% fall in GDP) and a subdued demand environment (despite record low mortgage interest rates) are expected to soften construction demand and result in some construction projects being cancelled.”

There could be potentially longer-lasting impacts on construction activity if New Zealand’s borders stay shut or the shift in work patterns observed during Covid-19 becomes more entrenched, Smith adds.


On Saturday, August 01st 2020 7:16 pm FJ said:

As always economists are quick to change there outlook as the current financial climate evolves or changes. Reality is ....they dont know! None of us do. Its down to your own experience and agenda ( Doing your own research is absolutely vital). My own experience could tell me that consents are rising because the average person could quite easily work out that building is actually cheaper or similar to paying exorbitant existing home prices, as long as you have land...and obviously they do. In addition, the construction industry will continue, NZ is in a prime position to attract some of the worlds best and most qualified people, so infrastructure will need to continue on this basis. We are now one of the most sought after countries to live.....yes it will be expensive to live here.....and?

Heartland Bank - Online 1.99
Kainga Ora - First Home Buyer Special 2.25
ICBC 2.45
HSBC Premier 2.45
Westpac Special 2.49
The Co-operative Bank - Owner Occ 2.49
TSB Special 2.49
ANZ Special 2.49
Kiwibank Special 2.55
SBS Bank Special 2.55
AIA 2.55
Heartland Bank - Online 2.35
SBS Bank Special 2.49
HSBC Premier 2.60
ICBC 2.65
China Construction Bank Special 2.65
TSB Special 2.65
The Co-operative Bank - Owner Occ 2.69
AIA 2.69
Westpac Special 2.69
ANZ Special 2.69
ASB Bank 2.69
HSBC Premier 2.89
SBS Bank Special 2.99
The Co-operative Bank - Owner Occ 2.99
AIA 2.99
Westpac Special 2.99
BNZ - Classic 2.99
ICBC 2.99
ASB Bank 2.99
China Construction Bank Special 2.99
Kiwibank Special 3.19
TSB Special 3.19
Heartland Bank - Online 2.95
Resimac 3.39
Kiwibank - Offset 3.40
Kiwibank 3.40
Kiwibank Special 3.40
Bluestone 3.49
ICBC 3.69
Heartland 3.95
The Co-operative Bank - Owner Occ 4.40
The Co-operative Bank - Standard 4.40
Kainga Ora 4.43

More Stories

Dunedin in demand

Thursday, October 29th 2020

Dunedin in demand

A supply and demand imbalance together with improved housing stock mean Dunedin’s values are on the rise, writes Joanna Jefferies.

Always do your homework

Tuesday, October 27th 2020

Always do your homework

With the housing market running hot there’s growing numbers of buyers out there and that’s left the Real Estate Authority (REA) reminding them to do their homework.

Education for landlords by landlords

Friday, October 23rd 2020

Education for landlords by landlords

Self-managing landlords are signing up in droves for the NZ Property Investors Federation’s new education programme which aims to help landlords run their properties like professionals.

What lies ahead for investors

Wednesday, October 21st 2020

What lies ahead for investors

Election 2020 is done and dusted – and a red landslide has left the Labour Party firmly in charge of the next government. But what could that mean for property investors?