Construction yet to start on 46% of residential building consents in city
Hamilton’s building sector is facing a “perfect storm” with construction yet to begin on more than half of residential dwellings consented in the past year.
East Ward councillor Andrew Bydder said he was “surprised” to learn 43% of residential consents issued last year had not started construction.
However, figures provided to the Waikato Times by Hamilton City Council revealed the number was actually 46%.
This compares to 33% in 2022, 28% in 2021, 30% in 2020, 34% in 2019 and 42% in 2018.
“It shows a big turnaround in the market from, say, a couple of years ago where every project would have gone ahead pretty much immediately because there's time pressure on everything to get it done,” Bydder told the Waikato Times.
“And the fact that it effectively compounds the falling consent numbers to something that really is quite a shock to the building industry because that means that we’ve got less than half of the building work actually under way.
“That is a lot of pain for the industry and that means we can expect job losses and that worries me for Hamilton's economy.”
In the year ending in February 2024, Waikato-wide consents were down 28% to 3,349, according to Stats NZ.
Last year in Hamilton there were 1207 residential consents issued, compared to 1415 in 2022. This year there have been 203 issued so far.
City programme manager – economics and policy Tiki Mossop said it was important to note that there were consents included in the numbers that would have only recently been granted building consent at the time they are counted.
“Council has seen an increase in the time between when a consent is granted and when construction starts, with more consents taking over 12 months to start.
“Anecdotal reports suggest that there are a number of factors driving this, including challenges getting finance.”
Bydder raised his concern in the Economic Development Committee on March 12, where he asked council if they could find out why projects were not being started. In the meeting, Mossop said council had talked to a few developers in May and November last year who said they had lodged consents early to avoid the additional cost of new insulation requirements by the government.
“There were estimates of five to 10 thousand dollars a house for the additional requirements and they were waiting to see when the market turned or when they thought the market would turn before they would start those projects.”
She also said infill developments had been impacted more than greenfield developments as it was harder to make costs stack up during a slowdown in housing prices.
There has been a notable jump in projects not having started since March 2023, according to council documents.
Building consents lapse after two years, so we assume that many of these projects are waiting for market conditions to improve feasibility and profit before they get underway, the report read.
Bydder said it was a “classic perfect storm of multiple factors hitting the market at the same time” but acknowledged some of those factors were outside of the council’s control.
However, he said while major reform was needed in the resource management area council could also make building consents easier by makings its processes more responsive and take a more proactive approach in helping people make compliance more quickly.
“Rather than just saying ‘oh we think you don't comply with this’ they could say, ‘well if you do this, you will comply’ so that can improve things for building consent, make it a lot easier.”