Number of new dwelling consents underwhelms economists

Residential dwelling consents issued by number, Dec 2016-Jan 2017 NZ: up 0.8%

Auckland: up 0.7% 1752 new dwellings consented in January 1253 houses 285 townhouses, flats, and units 116 apartments 98 retirement village units

Auckland new residential dwelling consent applications are running at least 1000 short of the annual demand, leaving economists worried.

ASB senior economist Jane Turner and Westpac senior economist Satish Ranchhod expressed concern after Statistics NZ issued data showing only 0.8 per cent seasonallyadjusted national residential consent increases in January and Auckland dropping back to only 0.7 per cent.

The economists’ stance is in contrast to that of Building and Construction Minister Nick Smith, who has praised the level of building activity.

However, the annual trend is rising.

In the year to January 2017, 30,123 new residential dwelling consents were issued, Statistics NZ said, well up on the 27,124 in the year to January 2016.

Turner expressed disquiet about the latest monthly figures.

“Construction activity remains a key driving force of New Zealand’s economic growth. The slowdown in Auckland housing consent growth is concerning given existing supply shortages,” she said of the modest 0.7 per cent increase in consents for Auckland for January.

“Strong population growth over the past few years has lifted housing demand in many parts of the country, and we expect momentum to continue at least for another year.”

Residential dwelling consents lifted slightly in January, the trend in housing consent issuance was now declining and non-residential building demand remained high, she noted.

“Non-residential consents dipped in January, as is usually the case. Consents appear to be holding at recent high levels, and are 9.2 per cent higher than a year ago,”

Housing consent issuance in Auckland is continuing to languish at levels lower than what is required to keep up with the needs of population growth. Consent numbers in Auckland dropped back 0.7 per cent over January, the sixth decline in the past seven months Satish Ranchhod, Westpac senior economist

she said.

Ranchhod said the data “leaves us looking at a soft start to the year in terms of construction activity”.

Lack of activity in Auckland was particularly worrying, he said.

“Housing consent issuance in Auckland is continuing to languish at levels lower than what is required to keep up with the needs of population growth.

“Consent numbers in Auckland dropped back 0.7 per cent over January, the sixth decline in the past seven months using Westpac’s adjustment for usual seasonal trends,” Ranchhod said.

“And over the past year, just over 10,000 new dwellings were consented in Auckland. To keep up with population growth and address the existing shortfall, Auckland needs to build upwards of 11,000 dwellings a year. And even then, it will require around a decade of strong building activity.”

Phil Twyford, Labour’s housing spokesman, said Auckland’s massive housing shortage was growing, not shrinking.

“The city is already around 35,000 houses short and that’s growing by 500 a month. Bill English and Nick Smith have made a hash of the housing crisis with half-hearted measures and stunts. They are more concerned with trying to make voters think they are doing something than actually solving the problem.

“It’s simple: we’re not building enough affordable starter homes. The Government needs to do its part,” Twyford said.

“Soon, Parliament will vote on Labour’s KiwiBuild Bill that requires the Government to build 10,000 affordable homes a year to sell to first-home buyers.

“If National wants to get serious about the housing crisis, they need to back the KiwiBuild Bill. They should also adopt Labour’s plan to boost the construction workforce with three years’ feesfree tertiary study and dole for apprenticeships,” Twyford said.

Smith said building activity was at a record high, topping $19 billion for 2016 after five straight years of strong growth. New Zealand was in its longest and strongest growth phase in building activity, with record levels of investment in homes, commercial buildings and infrastructure, he said.

“I am particularly encouraged by the ongoing strong growth in residential building activity, that has increased 19 per cent nationally and 27 per cent in Auckland over the past year.

“This is the fifth straight year of strong growth. You cannot grow a sector as large or as complex as building at more than about 20 per cent compound per year without incurring problems with quality,” Smith said last month.