Sharp increase in number of new building consents issued
"So we’re now at a point where we’re roughly building enough homes to keep up with population growth." Westpac Chief Economist
New Zealand councils consented almost 32,800 new dwellings in the year through November, 5.3 per cent more than a year earlier, according to Stats NZ.
That growth was driven by a 21 per cent increase in Auckland to 12,800, and a 21 per cent increase in the Wellington region, where 2727 consents for homes, apartments and retirement units were issued during the 12-month period.
“Stand-alone houses accounted for nearly two-thirds of new homes consented in the year ended November,” construction statistics manager Melissa McKenzie said.
“We saw a sustained increase in apartments, as well as townhouses, flats, and units, particularly in Auckland.”
Parts of New Zealand are in a sustained building boom, with economic growth and several years of strong net migration maintaining activity, even as Canterbury’s post-earthquake home construction has slowed.
Auckland, Waikato and Wellington have dominated that recent growth, with eight of the country’s 16 regions reporting declines in dwelling consents relative to the November 2017 year.
Stats NZ noted that consents in the rest of the North Island fell 8.1 per cent to 5470 in the year through November.
Dwelling consents in Canterbury fell 8.8 per cent at 4668, with those in the rest of the South Island down 2.5 per cent at 3,418.
ASB said while consent issuance is down from earlier in 2018, it is likely to remain “relatively elevated” to catch-up with housing demand.
“We are encouraged by the strong supply response evident in Wellington building consents over October and November.
In contrast, the signs of slowing building consents in Auckland over recent months, despite the well-publicised housing shortage, remains puzzling,” the bank said in a note to clients.
It noted the $831 million of nonresidential work approved in November was the second highest on record.
“There are no signs of a slowdown in commercial construction, despite weak business confidence levels seen over the year.”
New Zealand’s housing shortage — particularly in Auckland — was a key issue in the 2017 election.
The Labour-led coalition has pledged to build 100,000 affordable homes over 10 years under its KiwiBuild programme, a target that appears challenging given capacity constraints in the sector.
Last April, Westpac estimated that Auckland was short of about 30,000 homes.
Yesterday chief economist Dominick Stephens said building activity has picked up but will vary regionally depending on housing stock and population growth.
He said the country is now building more than twice as many homes as it was in 2009, while net migration is also falling away.
Those forces should move into balance sometime this year.
“So we’re now at a point where we’re roughly building enough homes to keep up with population growth,” he said.
“But we have to keep building at that rate” to clear the shortfall, he said.
Monthly consent numbers are volatile.
Historically consents for new homes tended to peak mid-year, for summer construction, but the trend to more apartments and the growth of the retirement home sector has increased the variability in the data.
A total of 3120 consents were issued for all types of homes in November, up almost 7 per cent from October but down 4.4 per cent from a year earlier.
It was the most since May, when more than 3,400 consents were issued, boosted by big apartment and retirement projects.
Stats NZ said that, on a seasonally-adjusted basis, the November numbers fell 2 per cent from October, but were 1.9 per cent higher on a smoothed trend basis.
Westpac said the November decline was concentrated in the multiple-dwelling data and was most pronounced in Auckland.
“Given how volatile consents for multiple dwellings can be, this one-month decline is of little concern,” Stephens said in a note.
“We continue to expect a pickup in residential building activity during 2019, although beyond that we expect construction sector growth to tail off.”