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Falling consents mean shortage not addressed

Flatlining consent trend means the current building boom is not producing enough dwellings to address major supply shortages in parts of New Zealand.

Wednesday, August 30th 2017, 1:15PM

by Miriam Bell

Statistics New Zealand’s latest consent data shows that, once seasonally adjusted, the number of new dwellings consents nationwide fell by 0.7% in July.

The decline came on the back of a 1.3% fall in consents last month.

The number of new dwellings consented in July was 2,762 which was 1.7% down on July 2016.

Construction statistics manager Melissa McKenzie said July’s fall was largely driven by a decline in the number of consented apartments and townhouses.

This was particularly apparent in the Auckland region, which had the largest fall in July. There was 774 dwellings consented but that was down by 29% year-on-year.

McKenzie said that Auckland’s numbers are quite volatile because almost half the dwellings consented are in multi-unit projects.

In contrast, the Otago region saw a 68% year-on-year rise in dwelling consents to hit 282 in July. This was driven by a spike in apartments in Queenstown.

ASB economists said the data shows the nationwide trend for consents eased for the third month in a row in July, with Auckland and Canterbury issuance well below mid-2016 peaks.

This means the country is still running short of what is needed to meet current population growth, let alone to alleviate shortages in Auckland, Wellington and Queenstown, they said.

“A concerted period of strong building activity will be needed to meet population needs and address housing shortages. But the jury is out on when the positive upward trend will reassert itself.”

The flatlining of consents is a particularly acute problem for Auckland.

In the year to July 2017, there were 10,051 consents issued in the Auckland region, with about 800 a month being issued on average.

But it is estimated that Auckland has a shortage of around 35,000 homes and needs to have 11,000 to 12,000 built each year for supply to keep pace with demand.

Westpac senior economist Satish Ranchhod said the construction sector upturn has run into some roadblocks from capacity constraints, rising cost pressures, tighter credit conditions and, possibly, pre-election uncertainty.

“While we wouldn’t want to read too much into a single month of data, the July performance is consistent with our view.

“We anticipate a period of subdued construction growth as a result of these constraints, though there is still a large pipeline of planned work.”

Read more:

Supply shortage will counter cooler market 

Shortfall to get worse before it gets better 

« Free Investment Property Showcase Events: Auckland, Wellington and ChristchurchSlowdown in value growth spreading »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone ▼3.49 ▼3.49 ▼3.49 ▼3.49
BNZ - Classic - ▼2.55 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

Last updated: 13 July 2020 7:38am

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