Building boom’s big handbrake

A slowing population may be the brake on the country’s otherwise rampant housing boom, economists say.

Statistics New Zealand yesterday said 39,881 building consents were consented in the year to January, creeping closer to their historical peak.

That was a 5.8 per cent increase on the previous 12 months, and just 144 homes away from February 1974’s all-time high of 40,025 consents.

However, the mid-1970s building boom still takes the prize for the level of activity per person. For every 1000 residents, there were 7.8 homes consented last year, compared to the record of 13.4 homes in 1973, when the population was about 3million.

With the country’s house prices in a frenzy, economists said the building boom was likely to continue for at least another six months.

‘‘Housing construction demand continues to climb, supported by low interest rates, strong housing market activity and New Zealand’s chronic housing shortage, ‘‘ ASB senior economist Jane Turner said.

With the border closed, she said New Zealand’s population growth had slumped and allowed some slack in the housing shortage. She expected housing construction to remain robust over the first half of the year, but to start to ease later in the year.

Westpac senior economist Satish Ranchhod expected building work to outpace population growth for some time, even when the borders reopened and migration picked up again.

Much of the consenting had been centred on Auckland, which was hovering around 17,100, ‘‘the highest level of issuance in decades’’ and up 14 per cent on the previous year.

Importantly, it had happened as population growth tumbled. ‘‘Current high levels of home building are now well above what’s needed to keep up with population growth and will go a long way to reduce the shortage of housing that has developed in recent years,’’ Ranchhod said.

Other areas seeing solid consent numbers were Canterbury, Taranaki and Hawke’s Bay.

Westpac said the latest figures were impressive given the level of disruption during lockdowns and were underpinned by a shift to smaller, medium-density homes.

While houses are getting smaller, the new figures showed medium-sized stand-alone houses, with a floor area between 100 and 200 square metres, had become much more common in the last decade.

More than 11,000 such houses were consented last year, double what was seen in 2010’s homebuilding slump in the wake of the global financial crisis. They were most likely to have three or four bedrooms.