Covid-19 impacts consents
The dip is not as bad as some predicted, but more tough times are ahead, economists say. Susan Edmunds reports.
The number of consents issued for new houses fell 17 per cent year-on-year in April, the biggest monthly fall since 2011, Stats New Zealand says. But economists are warning of worse to come.
A total of 2168 new homes were consented in April, bringing the number of new homes consented in the April 2020 year to 37,180. This was slightly down from the February 2020 year, which produced a 45-year record of 37,882 new homes consented.
The year-on-year drop was
6.5 per cent when seasonally adjusted after a 22 per cent fall in March.
New Zealand was in alert level
4 from near the end of March until almost the end of April, with the closure of non-essential businesses, including construction sites.
Factors driving the drop in consents included the direct impact of Covid-19 on plans to build, as well as changes to how consents were dealt with by councils during the lockdown, Stats NZ said.
‘‘Ultimately, there is still a large amount of uncertainty around the implications of Covid19 on the future supply of homes,’’ acting construction indicators manager Dave Adair said.
‘‘Typically, many homes are built within about a year of gaining consent, but these are unusual times and it will take some time to see if existing consented projects are completed or delayed.’’
Wellington consents roughly halved while Canterbury’s held up.
Infometrics economist Brad Olsen said consents issued in April were probably submitted before the lockdown, which kept volumes higher than expected.
‘‘However, it is important to point out that consents are only intentions to build, and so building activity could well turn faster than consents suggest, given the highly uncertain economic conditions.
‘‘Financing issues are becoming increasingly apparent for housing development, which will also restrict actual construction activity moving forward, as new projects will have limited access to funds.’’
ASB economist Jane Turner said there would be ‘‘limited’’ bounce back in May and June as a backlog of consents was processed, but construction demand would fall sharply over the second half of the year.
‘‘Over the coming months, we expect construction activity to pick up to complete projects which were under way before lockdown. Social distancing requirements are likely to impact the speed at which projects are completed and reduce the overall operating capacity of the construction industry, muting the recovery in construction output over May and June.
‘‘Potential for construction material shortages may also hinder the pace of recovery – the global economic shut down in response to the Covid-19 pandemic is likely to have reduced production of imported materials,’’ she said.
‘‘Disruptions to freight and transport logistics may present an additional challenge in sourcing materials. Finally, it is possible there could also be skilled labour shortages, with reports that some foreign workers went home during the pandemic outbreak ahead of international borders closing. With New Zealand borders effectively closed to nonresidents and the number of international flights severely reduced, it will be difficult to find additional skilled labour in the short term.’’