The recovery in residential building demand faltered in September, with dwelling consent issuance falling 17% and reversing the previous month’s surge.
In September 2011, the number of new dwellings authorised is down compared with the same month last year. Consents were issued for:
1,246 new dwellings, including apartments, down 1.3%
1,124 new dwellings, excluding apartments, down 6.5%
122 new apartments, up 103%.
In seasonally adjusted terms, the numbers of new dwellings authorised, both including and excluding apartments, showed large decreases in September 2011 following large increases in July and August.
Fewer new dwellings in 10 of 16 regions
The largest regional decreases in dwelling numbers were in Wellington, down 42 units to 65, in Hawke's Bay, down 40 units to 24, and inSouthland, down 17 units to 18.
The region with the largest increase in dwelling numbers was the Bay of Plenty, up 93 units to 181. This rise was driven by consents for three new apartment complexes, consisting of 107 units, in Tauranga. These apartments include 79 assisted-living units in a new retirement village. Although the number of new dwelling units is high in the Bay of Plenty, the value of these new dwellings has not increased by a similar amount. This is because the consent for only the first stage of this retirement village has been received, which only accounts for a small amount of the total value of the entire complex.
The decline follows two months of strong growth, which had been encouraging to see, said ASB economist Jane Turner.
The extent of the decline in September was disappointing. The decline was broad based, with falls recorded in our seasonally-adjusted estimate of Canterbury dwelling consents, and throughout the rest of the country.
Nonetheless, the underlying trend for residential building remains a positive one, with ex-apartment consent issuance up 10% over the quarter, which points to small recovery in residential construction towards the end of 2011.
There has been a small improvement in underlying demand for construction, reflected in the increased demand for housing over the past 6 months – particularly in Auckland. It remains too early to see any meaningful start to earthquake reconstruction in residential areas.
There remains a considerable amount of uncertainty around the timing of this, but the current consensus is for rebuilding to start to gather steam around the middle of 2012.
Non-Residential ConsentsNon-residential consent issuance in September continues to suggest an encouraging outlook for near-term private non-residential investment. In particular, consent issuance for offices and storage buildings continue to improve. This indicates businesses are feeling confident enough about demand over the coming year to plan for an expansion of operations. Today’s result is in line with the latest business confidence survey results. While there has been some easing in commercial construction intentions, the measure suggests a continued recovery in non-residential investment over the coming year – albeit at a very gradual pace.
Nonetheless, there remain areas of weakness. Statistics NZ notes half of the earthquake-related non-residential consent issuance in September was due to repairs to The Palms shopping centre.
Despite this, consent issuance for retail outlets such as shops and restaurants fell over February. This suggests the outlook for the retail sector remains subdued. The majority of earthquake-related consents in September were for non-residential buildings, which totalled $26 million. The remaining $3 million was for residential building consents.
Implications
The extent of decline in building consents in September was disappointing. Nonetheless, looking through the volatility, the underlying trend for building demand remains a positive one. This data does not contain any fresh implications for the RBNZ. The most crucial aspect of the construction outlook is the timing and extent of earthquake reconstruction activity and the RBNZ is not expecting this to pick up in any meaningful extent until mid-2012.
Earthquake-related consents total NZ$29 million in September
In Canterbury, building consents identified as being earthquake-related totalled $29 million in September 2011, compared with $20 million in August and $32 million in July. In September, non-residential building consents totalled $26 million. Over half of this value is attributable to repairs to The Palms shopping centre. The remaining $3 million was for residential building consents, including four new dwellings, said Statistics NZ.
Since 4 September 2010, about 580 earthquake-related consents have been identified, totalling $157 million. This includes 194 new dwellings, of which 145 were relocatable units.
(Updated with detail in headline)
Building consents - residential
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39 Comments
New building in quality, good sized sections in existing leafy suburbs seem to be more popular than the new large subdivisions.
4 new houses to be built across the road: . Young family taking the plunge on a new build - section $199,000 - house probably 300+ . Part of a newly sub-divided site with original home - Napier. Progress! Hopefully, improves values in the micro-environment/street!
Factual observations actually.
But the fun part is watching the anti-property renters buzzing out of their damp rented houses (next to loud stereos) watching their TDs lose money against inflation, their shares lose value, etc railing against property owners who enjoy living in their own house, making tax-free improvements on the weekend, reading their new increased CVs in the mail, and paying off their debt. And their neighbourhood is building new homes thus increasing their own property value for free....
Actually, I could get used to this "property-praising" prose .... .... OK - it's only tongue in cheek, so no threats, IP ping of death attacks, please ....
But when you think about it - hating people because they choose a certain investment/savings philosophy demonstrates more about your own character than about your object of hatred.
If an invester lost $$$ on the sharemarket or was passionate about choosing stocks would someone with a different world-view really need to denigrate them. Maybe the annoying thing about property is that it is illogical, shouldn't increase etc but against all those logical factors more people have made more $$$ in it than most other categories. And for the average wage earner, buying a house early in life will be the best foundation financially for them.
"But when you think about it - hating people because they choose a certain investment/savings philosophy demonstrates more about your own character than about your object of hatred. "
No, you ignorant house fetishests are despised because of the way your Lowest Common Denominator idiocy has dragged the country into the economic equivalent of a septic tank.
It had little or nothing to do with "young couple buys home, starts family, raises family in home, retires to home, then sells to another young couple and moves into a smaller place before shuffling off this mortal coil".
Playing Musical Houses is not investing. It's inflating. Prices go up and up and up for no good reason. It's just that you brainless know-nothings are willing to keep paying ever higher prices in the stupidly erroneous belief that Capital Gains are a God-given fact of life, and not an illusory and temporary state of affairs.
If you and your kind - a vast army of dullards - had put your money/credit/debt into something productive, the rest of us wouldn't be having to work so hard to bail out you, and the country as a whole, during what should have been for NZ only a minor economic downturn.
But no, you borrowed the nation into a zombie state of indebtedness in order to keep buying and selling houses to each other for ever increasing - and inflated - prices. Because you are clueless.
That's why everyone intelligent and capable hates you. And sniggers.
I guess as individuals we make economic decisions on what will be best for ourselves and our families rather than what will benefit the entire economy.
If a reasonable framework of taxation and opportunities for small business owners was in place more people would invest/work in their own business (try running a small business - and be answerable to bank managers who would only lend on property rather than business) but our financial institutions only want to see assets on their books not intangible businesses.
Investing in public companies may or may not benefit NZ (see 1980s). Other investments which may have helped our country have been mismanaged by unethical people.
Can you blame people for saving into the only asset which they have total control over - barring a default? Actually as only owning 1 house in which I live - not advocating property developing or investing in rentals, but rather buy well & paydown debt.
Anyway house-lovers Inc - we love you for your passion for your country Malarkey. Sense a group hug coming on.
Wrong tense MB, 'was' the best foundation....but you are right about 'made more money out of property' - in the past. The secret to any investment is: Not to have it when it goes down, no matter what it is. And let's not forget...no one has made anything until the cash is in the bank....
"The extent of decline in building consents in September was disappointing," ASB economist Jane Turner said in a note. "The decline was broad based, with falls recorded in our seasonally-adjusted estimate of Canterbury dwelling consents, and throughout the rest of the country." herald
Not a surprise. Try finding where any of the main materials components in a build have been reduced...steel?..NO..timber?..NO..Joinery?..NO..concrete?..NO..Labour?..NO
On top of that the council grab for fees with gst slapped on top remain where they were in the bubble...stupendously high....and you need to add the insurance grab on top...plus gst..!
No wonder then that fewer people are opting to build.
I have never seen the price of copper cabling come down Malarkey.
The light fittings yes....but not the wires or the labour.
The economy is starting to feel the consequences of labour costing too much.
But we have the pointy heads and corporates being handed bloated salaries plus bonuses as though there are no worries.
I think the 'new normal' building sector activity is here for good and it may well fall yet further.
EQC has paid out NZ$2.17 bln http://bit.ly/sp1Sde but consents for just NZ$39.2 mln of building issued since #eqnz http://bit.ly/sp6T2v
Property Values Increased: NZ Herald ... CV's
Grey Lynn and Westmere had the biggest increases, with an 18 per cent rise in property values, followed by Pt Chevalier, Western Springs, Kingsland and Sandringham up 13 per cent, Mt Eden and Epsom up 10 per cent, Ponsonby and Freemans Bay up 9 per cent, Mt Roskill up 8 per cent and One Tree Hill, Greenlane, Onehunga, Oranga, Penrose, Three Kings and Royal Oak up 7 per cent.
Better than money in the bank? Has this news been suppressed on Interest.co.nz?
So 3 years ago if you had bought a house for 750k (now 750 x 1.18%) in Grey Lynn on mortgage of 400k would you be better off than renting and watching your 350k earn 4% pa less tax? But I guess it was a risk.
Notice he neglected to quote this:
"Valuation tumble shock for owner"
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10762760
"It's obviously a mistake..."
:D
Cool!
"A Mission Bay homeowner was shocked to get her new house valuation and find it about $200,000 less than she expected.Judith Pohn said her Prebble Place had a $690,000 valuation three years ago and is on the market for $734,000.But the valuation that arrived on Thursday put it at $550,000."
But as any R/E agent will tell you " If CV is low, don't worry...it's just about cheaper rates for you" if CV is high " That's the price you should be getting for your little renter!"
Stories in Wellington papers a week or so ago re similar bleaters whining about low valuations. One particularly 'special' chap whingeing up a storm over how he'd bought it for 360K, well below valuation of umpty-billion-trillion, and now it was only worth about what he'd paid for it a couple of years ago. The heart truly bleeds.
Ah, here we go:
http://www.stuff.co.nz/dominion-post/news/5810563/Otaki-bach-valuations-chopped
I just love how this idiot is simultaneously boasting about having 'snapped it up' for 340K, and all outraged that this affected the valuation.
My properties in the same locale are well and truly overvalued by the new CVs, as they were with the old ones as well.
The formula appears to be no change in land but a 28% rise in improvements, giving an 11% overall increase. What a load of cobblers. Can't sell at CV so recognize it for what it is, a rating tool.
BTW: good luck with your move.
The way home builders have jacked up new house prices in CHCH, I'm not surprised no one is building. They have standard plans on their websites that have inflated $100,000 in the past year.
Sooner or later they'll realise CHCH is now a less attractive place to live, and how many jobs have really gone.
Queensland, then, yoda :) "(Austalian) House price continues to fall"
Well, they are just finishing the foundations concrete pour on new house across the street. That's other enjoyable thing about property is the tangible, practical 3D nature of the process. And in 8 weeks this new house will be an social/economic platform for a family (2 kids go to local school boosting teacher jobs partially), 2 adults working locally boosting local economy, materials supplies helping suppliers, council adds services, - so really does add to NZ economy. Or was it better for NZ to have 2 acres growing grass for the birds/ducks?
Yes it does add to the NZ economy...but just..once...the bit you see going on across the road. After that it is a combination of trapped debt and whatever equity the 'owners' have. No one has a problem with productive delevopment, not even me, but those who sit on second hand houses, expecting 'magic' and no or little effort to make themselves 'rich' are the reason 'we' have $182 billion worth of gross debt. And here's the thing...it is neither supportable nor sustainable. Property prices, well the land component actually, will fall and the economic value will revert closer to that which you saw before it was built on....grass value..or alternative use, to be precise. A Land Tax looms large, MB....that will start the process off...
Here's the bottom line on building...you will fork out $300,000 for an average box that looks just like all the other boxes...and about $40,000 of that will be the taxes you are paying to the govt.....so if you had to borrow that $40,000 in the first place, the taxation is costing you the extra mortgage charges..every year. On top of that, your wonderful local council will value your new property capital improvements as being $300,000 and yes you will pay rates on that...so you are paying rates on the $40,000 that was tax taken by central govt...hang on...there's more....you pay gst on your rates...which means you are paying taxes to central govt on the rates that are being paid on the taxes you paid to central govt.....how you like them apples.....?
Ha ha. Note to self: must stop working from home, too much temptation to bait anti-property-isers.
Anyway I like mowing lawns & planting trees. Noone can take that away! Enhancing your garden for little cost can add 1000s to your home value. Tax-free sweat equity.
I've been calling a fatally wounded construction sector all year, as one who until 2 months ago worked within the industry.
Its in an abysmal state.
And its not going to improve much over the next two years. Yeah, there will be a bit of rebuild in Chch - but Auckland is going to remain sickly
Expect the Auck economy to tank in 2012
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