June dwelling consents hit 30 year high

The 3,447 consents issued compared with 2,544 in May and were 44.3% higher than the 2,389 consents issued in June last year.

In seasonally adjusted terms, consents jumped 32.4% following a 0.9% rise in May - that was revised from the previously published 0.5% decline.

The figures appear to be an anomaly and Statistics New Zealand says the trend, excluding apartments, has still been declining since October last year.

Mark Venning at Statistics New Zealand says two factors explain some of the increase: some territorial authorities have raised their prices from July 1 so there was a rush in June to get applications in before that. And apartment approvals jumped from 306 in May to 977 in June, 690 of them in Auckland.

That last number is particularly surprising since most commentators highlight the market for Auckland apartments as being particularly at risk in a downturn. Auckland consents accounted for 39% of the June total.

Excluding apartments, consents still rose 10.4% from 2,238 in May to 2,470 in June.

"With population growth declining on the back of a continued slowdown in net inward migration, the current level of residential construction activity implies a rate of increase in housing supply that cannot be sustained," says Ulf Schoefisch, chief economist at Deutsche Bank. The apartment market is particularly at risk of developing significant oversupply and potentially prices could fall significantly next year, Schoefisch says.

But he notes that some previously approved apartment projects are now being canceled because of rising construction costs and shrinking profit margins for developers.

The year-on-year increase in the average construction cost per square metre has remained at about 7% in recent months, slightly lower than it was at the beginning of the year, he says.

The annual numbers, which showed consents rose 13% to 32,851 in the year ended June, were also the highest total for a year ending June since 1974.

Consents rose in 13 of the 16 regions in June compared with June last year.

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