National building consent data continues to fall, down a quarter in the past year, but Prime Minister Christopher Luxon announced stimulatory moves today and a construction expert anticipates a silver lining.
Stats NZ data today showed that in the year to February, consents were issued for 36,276 new homes, down 25 per cent annually. Wellington numbers fell 40 per cent annually, Waikato down 28 per cent, Auckland down 27 per cent and Canterbury was down 21 per cent.
Luxon today unveiled changes to building supply regulations to address shortages. He was in Upper Hutt with Building and Construction Minister Chris Penk. Elimination of border barriers for overseas building products would help “cutting red tape and ensuring we can build more houses in New Zealand”, Luxon said.
Mike Blackburn, a Christchurch-based management consultant and construction sector adviser, cited massive immigration as meaning low new-house starts must reverse soon. That would stimulate the building and development sectors.
“The silver lining is that inflation is coming down, then interest rates will decline. We have around 130,000 annual net migration and for every three people coming into New Zealand, we need a new house. The underlying demand is there. The market is not reacting right away because everyone’s hurting and it will take another 12 months for the industry to pick itself up.
“But the underlying demand for more new housing is there,” Blackburn said.
In the meantime, the sector could be far gloomier than today’s numbers actually showed, he said, because not all consents resulted in new buildings rising.
He estimates 10 to 15 per cent of new residential building consents granted at this time do not result in buildings rising immediately.
Lack of access to finance, high interest rates, unemployment and the cost of living were all factors that have curtailed demand.
New Barfoot & Thompson data out today showed that agency had 5741 available residential properties for sale up till the end of March in the areas where it operates, which include Auckland and Northland. That is up on the 5382 properties it had for sale by the end of February. More listings are going on the books but people are not buying all the properties being listed, showing a mismatch between the buyer and seller markets.
Usually, the agency’s available listings run at 2000 to 4000 properties for sale at the end of months in the period from 2013 till the end of March this year. But sales numbers did jump from 633 in February to 1061 last month.
Blackburn said historically, new building consents had resulted in more homes rising nationally.
Two to three years ago, the vast majority of consents did result in buildings when the economy was booming and during the Canterbury earthquake recovery, it was almost a one-for-one situation, he said.
Blackburn, who writes a quarterly construction report on national building data, said a completion rate of 97 to 98 per cent in Canterbury after the earthquakes was extremely strong and somewhat unusual.
But nationally, the number would be much lower now, principally due to the economic downturn.
Buildings consents to January dropped 26 per cent annually “but I believe the numbers are far worse than that. I’m aware of a number of Auckland, Wellington and Canterbury multi-unit residential projects that are consented but those projects have been cancelled or delayed indefinitely. No one is buying developments off the plans due to lack of pre-sales. Speculative builds are not going ahead,” he said.
The only way to measure what had been built as a result of consents issued was to examine code compliance data, also released today, he said.
New housing in Onehunga. Photo / Fiona Goodall
“That will show construction activity around the middle of 2022,” Blackburn said.
The peak of new building consents was in May, 2022 when 51,015 annually. Never before had New Zealand built so many new houses in any one year.
“Those numbers were unsustainable because we don’t really have the capacity to continue building that amount of housing. I believe consent will continue to decline or remain flat till December.”
Fast-track consents via the Ministry for the Environment was a further stimulation “and all this goes to improving confidence in the construction industry. As the economy improves, so too will the construction industry,” Blackburn said.
Anne Gibson has been the Herald’s property editor for 24 years, has won many awards, written books and covered property extensively here and overseas.
