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Building consents flat line

No end in sight for widespread supply woes as new data from Statistics New Zealand reveals residential building consents dropped in August and Unitary Plan appeals bite.

Friday, September 30th 2016, 12:30PM

by Miriam Bell

New dwelling consents actually hit an 11 year high in August 2016 with 2,834 consents being issued, according to Statistics New Zealand.

But, once seasonally adjusted, the number fell by 1.0% from July 2016.

In annual terms, 29,627 new dwellings – with a total estimated value of just over $10 billion - were consented in the 12 months to August 2016.

This was a 14% year-on-year increase in the number of homes and, at the same time, the value increased by 24%.

Statistics New Zealand business indicators senior manager said consent values are the highest they’ve ever been.

“However, in terms of the numbers we’re still not building quite as many homes as we did around 2004, and are still well short of the building boom in the mid-1970s.”

All North Island regions saw increases in consents over the last year, while the picture for the South Island was mixed – largely due to the unwinding of the Christchurch residential rebuild.

For supply stricken Auckland, the data held good news: 9,851 new dwellings were consented over the August 2016 year, as compared to 8,615 in the previous year.

However, economists are concerned that, while consents might be up for the Super City, ongoing issues with the Unitary Plan are likely to impact on any boost to supply.

ASB senior economist Jane Turner said they are concerned that the legal challenges to the Unitary Plan could delay the implementation of the new density zoning rules.

This makes for added uncertainty for developers, which could cause some projects to be deferred, she said.

“It also reinforces that the Reserve Bank is likely to roll out loan-to-income lending restrictions next year (if feasible), given hopes of a supply response are likely to be dashed.”

But she added that Auckland’s strong gains in consent issuance over the past three months are encouraging.

Westpac industry economist David Norman agreed that Auckland faces consent difficulties.

He said that, once seasonally adjusted, Auckland consents were up 9% month-on-month – but the appeals against the Unitary Plan will slow development of supply down.

The administrative burden associated with a resource consent has increased significantly both for developers and for council staff as a result of the appeals, he said.

“These obstacles mean we are unlikely to see the sudden uptick in resource consents and, consequently, building consents issued that it was hoped the Unitary Plan would deliver in short-order.”

Neither Norman nor Turner were surprised by the 1.0% fall in consents nationwide in August.

Norman said it was much in line with their expectations after consents surged 20% in June, and experienced a partial moderation in July (down 8.1%).

“The trend is still up, with more than 29,600 dwellings consented in the last year countrywide.”

Turner said consents remain highly volatile but that, attempting to look through the noise, the underlying trend is still encouraging.

The August and July falls only partially reverse June’s thumping 20% increase, she said.

“Further, the weakness in August is largely due to apartment and retirement unit consents – both of which are volatile month to month due to the lumpy nature of projects.

“Looking at consents for houses and townhouses, the trend remains one of steady growth.”

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ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
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Credit Union Baywide 6.15 4.95 4.95 -
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Finance Direct - - - -
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Heartland Bank - Online - - - -
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HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
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HSBC Special - - - -
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Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 ▼4.14 ▲4.30 4.64
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Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.39 ▲3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
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The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
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Median 5.34 4.04 4.09 4.39

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