Residential consents fall from all-time high

Applications to build new homes have fallen sharply, but a rider has come out with the new data that the sector is coming off an alltime peak.

StatsNZ information showed consents were issued for 37,000 new residences in the year to December, down 25 per cent from the

49,538 consents issued a year ago. Michael Heslop, Stats NZ construction and property statistics manager, said the previous year’s consent numbers were the highest in a calendar year since records began.

Consents for townhouses, apartments, retirement village units and flats dominate consents. There were 16,799 townhouses, flats, and units in the latest annual consent figures, 2518 apartments and 2267 retirement village units.

Regions with the highest number of consents were issued were Auckland with

15,488, Canterbury with 6959, the Waikato with 3548 and Wellington with 2427.

Numbers dropped towards the end of last year when 8505 new homes were consented in the final quarter, down 27 per cent compared with the same period in 2022.

Economist Tony Alexander noted the trend in the residential building market lately.

Before today’s numbers were released, he said the number of consents issued for new dwellings rose from a multi-decade low of 13,500 in 2011 to a peak more than 51,000 in May of 2022.

Since then numbers have fallen to 39,900 in the year to October 2023 with numbers in the three months to October 28 per cent lower than a year ago.

“Growth in supply is happening, but it is becoming smaller for now and it pays to note that the actual net addition to the country’s near 1.9 million number of dwellings is less than the consent numbers suggest. By one estimate only 80 per cent of consents these days lead to actual construction as compared with over 95 per cent in the past,” Alexander said.

Also, more housing these days involves the demolition of one or two existing dwellings to allow the erection of townhouses.

New supply is falling and if nothing else was changing this would tell us that there is upward pressure on prices and the cost of construction keeps rising for many reasons often related to desires to improve the quality of new housing stock and simple bureaucracy in action, he said.

Selling new houses has also become harder. Garry Shuttleworth, a director of Compass Homes (Franklin), said this week that the company is no longer continuing and it had not sold a home for 12 months.

He has not decided what to do yet and the company is not in liquidation, receivership or administration.

“It’s the perfect storm,” he said of problems in the residential building sector which beset his company.

Two staff members who were in sales had resigned, the price of land had risen astronomically, building material costs were escalating, interest rates were still high, inflation remained elevated and people were having trouble getting access to finance, he said.

Sections which were just under $200,000 a few years ago were now going for $550,000 and above in Po¯keno alone, he said.

“At the moment, I’ve ceased trading [that company] and what I will do, I don’t know. I’ll have meetings in the next few weeks to determine that. The company is unable to pay its bills,” he said.

How much is owed remains unknown but one creditor said he was owed more than $80,000.