Building consents issued break all-time records

Property / news

Continuing high building consents for townhouses and other denser housing styles drives builders plans for more housing to their highest monthly level ever

13th Jan 22, 11:07am by David Chaston

The number of new dwellings consented per 1000 residents rose to 9.5 for the year to November, the latest data from Statistics NZ released today (Thursday) has revealed. That is up from 7.6 per 1000 in the year to November 2020.

But it is a long way from the all-time record which is 13.4 new dwellings per 1000 residents which happened almost fifty years ago in the year ended December 1973.

Currently, Auckland and Canterbury regions showed the highest number of new homes consented per 1,000 residents with 11.9 in Auckland and 11.6 in Canterbury, followed by Waikato with 10.0.

While the consenting rate is far from all-time records, the actual number of new dwellings consented to be built reached 4688 in November, which is an all-time record for any month. The previous highest was 4490 in August 2021.

The key driver is the rise and rise of consents for townhouses.

Auckland's consent levels reached a new record high too in November, bringing the annual level to more than +20,000 new homes for the first time ever. For Canterbury, the level is more than 11,500 for the year. For Waikato, they now exceed 5000 for the year, also a record.

The value of consented alterations and additions (renovations) was up +22% over the 12 months to November, to $2.3 bln which is a record high. For Auckland, renovation consents were up +22% in the year to November, but are still lower than the record high which was in July 2018. For Wellington, the November 2018 reno consent levels were an all-time record high. For Canterbury, the record high was in 2014, but the current levels are +12% higher than a year ago.

Building consents - type

Select chart tabs

Source: Statistics NZ

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

45 Comments

by HouseMouse | 13th Jan 22, 11:39am 1642027191

Just a reminder, an obvious one, that consents don't equal houses built.

In recent times a large proportion of dwellings consented have been built, but that's going to change in the coming year, with demand falling off a cliff and construction costs soaring.

by Pa1nter | 13th Jan 22, 1:21pm 1642033302

Sure, but more consents is a better indicator of more construction than less.

by JimboJones | 13th Jan 22, 11:46am 1642027604

Look what happened to Avocado prices when supply increased...

by Noncents | 13th Jan 22, 12:37pm 1642030668

Asparagus may be more apt for the NZ environment.

Excess gets mowed so that prices can remain constant.

by aaron.netguide | 13th Jan 22, 12:38pm 1642030714

Avocados get rotten ... Houses gain character (or in some cases leak)

by Gen X-ploited | 13th Jan 22, 11:51am 1642027878

All those genius property investors have realized that they are in fact experts at everything to do with property so have decided they might as well use their expertise to make more money and just build a few houses. It's just a bit of wood after all.

by HouseMouse | 13th Jan 22, 11:58am 1642028282

Quite a few mum and dad amateur developers rushing in trying to get some of the action.

Not going to end well.

by Squishy | 13th Jan 22, 11:57am 1642028258

Good, hopefully this rapidly translates into completed dwellings. We clearly need a pro-construction era to just reduce mounting pressure.

by HouseMouse | 13th Jan 22, 11:59am 1642028344

Not going to happen, see my first post.

These are the final throes of bubble mania.

by ikimpaul | 13th Jan 22, 12:13pm 1642029216

consents are considerably higher than the last building boom in NZ in 2004 - when consents peaked at 8.3 per 1000. That boom was followed by a recession and a period of negative immigration.

by HouseMouse | 13th Jan 22, 12:23pm 1642029801

Consents fell off a cliff in 06/07, a result of increasing interest rates and the collapse of development financing.

by HouseMouse | 13th Jan 22, 12:25pm 1642029923

Given this obvious historic precedent and obvious issues, the lack of economic commentary on an impending drop away is poor, potentially negligent.

Tony Alexander is the only professional economist I can recall commenting on this.

by Eschaton | 13th Jan 22, 12:40pm 1642030837

With a few years worth of work in the pipeline for most builders, why would there be an impending drop off anytime soon? Perhaps that'll be when supply catches up with demand, which kiwibank estimates will be around 2024-25 subject to immigration settings.

by HouseMouse | 13th Jan 22, 1:09pm 1642032597

Think about it.

I am not talking about building underway (although some of that could face issues too)

Where's the demand for new housing coming from? There was a lot of demand even 2 years ago, when developers could build and sell 2 bedroom townhouses for 600-650k in lower value Auckland locations.

Now, those same townhouses need to be sold for 800-850k, because of the rapid escalation in.land and construction costs.

That's a big difference in price for FHBs (and investors).

Then you factor in both rising interest rates and greater scrutiny of lending.

As I have said before, because of the existing pipeline we won't actually see the rapid slowing of building till late this year or early next year.

by RickStrauss | 13th Jan 22, 2:16pm 1642036617

There are plenty of renting folk who would be happy to buy their first home. All that's needed is for prices to come down to meet that demand.

by HouseMouse | 13th Jan 22, 3:21pm 1642040489

The problem is developers won't be willing to do that....they need to make a profit

by Essen | 13th Jan 22, 3:34pm 1642041245

Or at the very least recover their costs. Many have paid eye watering prices per sqm for land while material costs continue to go up multiple times during the life of the project.

by JimboJones | 13th Jan 22, 3:45pm 1642041957

Hard to see how you can make a profit on a 800m2 section you buy in South Auckland for $1.5 mil. Even if you manage to build 5 houses on it averaging 400k each (seems unlikely these days) you need to sell them for 700k each after agents fees just to break even.

by HouseMouse | 13th Jan 22, 4:24pm 1642044277

And don't forget GST...

by Rob Reid | 13th Jan 22, 5:38pm 1642048728

An avalanche of immigration starting later this year will keep the mania going, even if we need to pack 3 families into a 90sqm rental.

by Jesse1 | 13th Jan 22, 5:59pm 1642049954

That's pure speculation. I'll equally speculate that there is an avalanche of people going to leave NZ this year and net migration will be strongly in the negative. Many young people have lost hope of a future here.

by Eschaton | 13th Jan 22, 5:54pm 1642049690

Depending on the suburb, number of bedrooms and spec, most townhouses in South Auckland are more than $700k. Around $850k for 3bed.

by HouseMouse | 13th Jan 22, 6:24pm 1642051456

He was saying that's break even, and it's about right. 150-200k on top of that 700k is profit margin.

3 beddies are more like 900k in South Auckland now

by JimboJones | 13th Jan 22, 6:36pm 1642052213

I guess if they make 200k x 5 that is a mil in profit. But it won’t take much of a price fall or cost increase to wipe that out.

by kiwiana02 | 13th Jan 22, 6:26pm 1642051609

House Mouse - Will they have any choice in the matter? If prices drop, and they need to sell, they will have to take the market price like buyers have had to.

by HouseMouse | 13th Jan 22, 8:40pm 1642059629

Remember most development is off the plan these days, if buyers have agreed to a price of X when they execute the Sales and Purchase agreement, then they are obliged to pay that. So in a way more risk lies with buyers than developers, at least in terms of potential house price falls. Although plenty of risk for developers too, with soaring construction costs.

But I'm more interested in what happens beyond the development currently underway.

Ie. how much New development will commence after say April this year. My prediction is - much less than has been the case over the past few years.

So once much of the the current pipeline is complete by later this year, a big fall-away in house construction hitting late 2022 / early 2023.

If I am right, we should start to see building consent issuance starting to fall away by winter. There will be some naive, amateur developers who will be late to realise what's happening though. But most should realise there's little point in pursuing building consent approvals if demand is tanking.

But I could be wrong, residential construction might keep going gang busters over the next couple of years, defying these things and history (where there has always been boom and bust in the sector). I guess time will tell, and I am sure people will let me know if I am wrong :)

by Whatwillhappen | 14th Jan 22, 8:44am 1642103080

My neighbour's house is sitting unfinished (he's trying to live in it with an outdoor shower and tent).

The builder is just too busy to come around, and supply woes have been ongoing for at least 6 months. Construction company failures will be a matter of cashflow, not demand.

by Essen | 14th Jan 22, 9:59am 1642107543

Ie. how much New development will commence after say April this year. My prediction is - much less than has been the case over the past few years.

Some of the more experienced developers have already started slowing down, and they are happy to bank their land and consented plans for future.

by RickStrauss | 14th Jan 22, 2:41pm 1642124464

Actually why it'd be beneficial to upscale Housing NZ's building capacity, including in the training of tradies. Like the Ministry of Works of old. Need to smooth the supply of both houses and skilled people during the hard times.

They don't really need to make a profit on houses, just get them built.

by Pa1nter | 13th Jan 22, 1:28pm 1642033683

Like almost anything, there's too many factors to make a prediction.

At the start of the pandemic, the government greenlit a lot of extra public works, a decent chunk of these haven't even broken ground yet

There's an exodus of boomers from the cities putting demand on regional housing that won't end anytime soon.

Properties vacated by boomers are being developed into higher density

There's no foreign workers coming in to meet demand.

So yeah 2024-25 is potentially right.

by RickStrauss | 13th Jan 22, 2:54pm 1642038846

Boomers moving to areas with fewer healthcare resources. Interesting times.

by Chris-M | 13th Jan 22, 5:40pm 1642048838

With health care going the way it is, there are going to be very few healthcare resources anywhere.

by Pa1nter | 13th Jan 22, 6:11pm 1642050696

Regional hospitals are doing a lot of expansion for this very reason.

by JimboJones | 13th Jan 22, 6:34pm 1642052096

But will they be able to attract staff to retirement cities where the only nightlife is the local RSA?

by Pa1nter | 13th Jan 22, 9:00pm 1642060820

A lot of people seem to be turning off cities, and there's cheaper living costs.

And doctors and nurses usually seem too tired to nightlife.

by RickStrauss | 14th Jan 22, 2:42pm 1642124547

Problem is the city retirees have already bid up the house prices (followed by the rent prices) so the move for younger folk makes less sense than it did.

by Whatwillhappen | 14th Jan 22, 8:39am 1642102776

I'm just thinking Ireland. Ghost developments after a recession. Is the housing shortage genuine or is it just that investors want more rentals?

by hum | 14th Jan 22, 1:32pm 1642120321

The housing shortage was an easy excuse trying to justify insane prices. just as the genius classic Facebook comment "IT iS jUsT SuPlY aND DEmAnd DUUH"

by CWBW | 13th Jan 22, 1:03pm 1642032189

Sounds like building intent is rising.

Will be interesting to see the construction sector gets hammered through over-commitment resulting in another push for existing dwellings.

by Dave Moderato | 13th Jan 22, 2:51pm 1642038690

People don't live in consents. And there appears to be a lot of such 'consents' in my town!

by nktokyo | 13th Jan 22, 3:57pm 1642042640

The CCFA has other plans

by MortgageBelt | 14th Jan 22, 8:01am 1642100499

Exactly - how can most owner occupiers build without an approved mortgage?

by Flying high | 13th Jan 22, 5:48pm 1642049339

Off topic: but NZ is not alone when it comes to rising rents. Tenants pay a landlord to live in a house. Landlords get paid by the house AND the tenants.

Released today, Domain’s December 2021 Rental Report shows (Brisbane) house rents rose on average by $20, or 4.3 per cent, over the quarter to $480, and by 12.9 per cent over the year to cement what is now the longest period of continuous house rent growth in the city’s history.

The second-best performing city was Canberra, where house rents rose by 12.5 per cent over the year to $675 per week.

by Carlos67 | 13th Jan 22, 6:37pm 1642052235

So many variables, the number of consents doesn't matter, something else comes along to push prices even higher. The USA just had a record rate of inflation for December, not seen for decades. Like I said something else just comes along like rapidly rising inflation and the fact you cannot buy a sheet of Gib or half the wood you need at present so your stuffed one way or another. Just when you think there is a logical reason for house prices decreases, the total opposite happens.

by hum | 13th Jan 22, 8:17pm 1642058254

In the case of rapidly rising inflation there should be a rapidly rising ocr and interest rate. But it doesn't look like the reserves banks will be brave enough or are actually letting inflation go on purpose to deleverage the asset owning class.

On the construction material side this will only affect the builders but wont increase prices. construction cost are only marginal on current asking prices. Let alone the already oversuply of properties