The supply of new housing continues in boom mode with a record 49,733 new dwellings consented throughout the country in the 12 months to the end of February this year, according to Statistics New Zealand.
That's almost 1000 new homes a week, and is up 25.3% compared to the 12 months ended February 2021.
In the month of February this year consents were issued for 4195 new dwellings, up by 34.1% compared to February last year.
The biggest growth in percentage terms has been for retirement village units, with 2942 consented in the 12 months to February this year, up 64.0% compared to the previous 12 months.
That was followed by townhouses and home units +45.8% and stand alone houses +15.6%.
However construction of new apartments appears to be on the wane, with 3910 consented in the 12 months to February, almost unchanged from the 3930 consented in the previous 12 months. That follows an 11.7% annual fall in new apartments consented in the 12 months to February 2021.
Stand-alone houses remain the most popular type of new dwelling being built, with 25,518 consented in the 12 months to February, outnumbering all other dwelling types combined.
However that gap is rapidly closing with strong growth in medium density developments likely to push their numbers ahead of stand-alone dwellings in the not too distant future.
Around the main regions, 20,786 new homes were consented in Auckland in the 12 months to February, up 21.8% compared to the previous 12 months, in Waikato 5094 (+23.3), Bay of Plenty 2533 (+17.1%), Wellington 3687 (+23.8%), Canterbury 8317 (+42%) and Otago 2449 (+27.4%).
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The interactive charts below track the monthly consents issued by region and housing type.
Building consents - residential
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Building consents - type
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58 Comments
We wouldn't need any of those if population growth wasn't the central plank of our economic policy.
Imagine if we saw a glut in houses.
...and a falling population
Interesting comments. I have no idea what would be a good benchmark to measure this "record number of consents" against, so does anyone know what the average/ median number of consents would be per year?
2017 30162
2018 31245
2019 34262
2020 37882
2021 39725
2022 49773
I also imagine people don't live in consents.
I have never seen people live in consents. I have seen many people pay big money for off the plan developments though. And still cannot live in that either. And even lose big money on all of that process without even a spade going into the ground. Humans are strange creatures.
'Off the Plan' is great when the going is good, often disastrous when the economy and development sector heads south....
Once borders reopen, expect immigration to rebound and surge to levels never seen before.
The business community, opposition parties and tertiary education providers have already done the groundwork with scaremongering articles and posts, suggesting tens of thousands of young Kiwis will be leaving NZ soon for greener pastures.
The last thing we should be doing is import more consumers into NZ adding to aggregate demand while our supply lines are already stretched to the maximum.
There will be significant outflows offsetting this, don't underestimate the appeal of Australia, Europe and the USA (especially on the comparative wage/salary front).
I am currently on a Skilled Migrant Resident visa. When I applied the processing time was 3 months for expression of interest (EOI) and 4 months for Processing. Total 7 months.
The current waiting time is 4 months for EOI and 33 months for processing (Source: How long it takes to process a visa application | Immigration New Zealand). That's over 3 years before you get a residency visa. Work Visa's do not allow you to buy property in New Zealand.
Not in the least surprised. I can supply numerous examples of INZ visa processing that would make you blanch [Blanch = flinch or grow pale from shock, fear, or a similar emotion.] If their bureaucratic nightmare prevented you buying a house last year than they have done you a service. 18 years ago I stuck it out (not that I had to wait 3 years) but only the determinedly stubborn stick it out - equally talented potential immigrants just go elsewhere.
Now I am lucky enough to be a Kiwi I'd prefer a 'keep them out' policy but I can understand the argument for 'bring in more immigrants' what simply is not defensible is INZ's trial by ordeal.
If it is not clear I really do hate INZ. But when you do become a resident and qualify for citizenship then you have the pleasure of dealing with the NZ Passport office - so friendly, pleasant, efficient and fast that you will think you are in a different country.
If we are entering a credit crunch, central bank tightening and recession, with existing supply chain, material shortages and cash flow issues effecting developers…. How many of these recently consented projects will actually get built?
It will be interesting to come back to this in 12-18 months and compare the Q3/Q4 2021 and Q1 2022 consents vs number of completes.
There is already 32k properties for sale on trademe and negative migration.
Exactly. Many of them won’t be built, but we will need those timeframes to confirm that. I expect building consent issuance to drop quite a lot by June.
If the developer starts the project the bank will do everything to complete the build. Even if this means without the developer. China blows them up to avoid the glut and further costs. Does trademe properties go past 32K ?
Auckland development with 15 townhouses listed for mortgagee sale.
https://www.stuff.co.nz/business/128204540/auckland-development-with-15…
Brooklands Estate is fully consented for 104 sections, and earth worked ready for development. Inground services to be laid on this Autumn, completion anticipated to complete early 2023.
https://landsdale.co.nz/brooklands-estate-hawkes-bay
2 of these sections are for sale now. The asking price is about 1.5K per square metre. And no one is interested.
I wonder what the asking price will be in 12 months time ?
Typical Property Brokers ridiculous prices.
Oh just the start. This is all about to play out exactly as I have been saying.
Independent_Observer.
I assumed it would be the smaller developers and builders struggling this early on not a bigger project like this with 10/15 already sold. You’d think the banks would be more forgiving of this sort of project in Auckland but I guess not? Article suggests a Chinese bank. I wonder how many current building projects have lending from China? Interest rates have only just started going up, so this is a baaaad housing market omen.
Think of these smaller developers as 'The Canaries in the Coal mines.' And the banks have lots of mines and they can see (what we can't yet) many canaries starting to look sleepy in many a mine.
Shh, he's not dead, just asleep, cue: https://www.youtube.com/watch?v=vZw35VUBdzo
It's on the precipice, Ginger, trust me. And I also note, without naming names, that some mid-large sized developers are also close to the edge.
In the NZH today, "Property records show a mortgage is held over the titles by New Zealand-registered ENGRW of 7a Gardner Rd, Epsom, the home of sole director and company owner Auckland businesswoman Guirong Wen.
She featured in legal disputes last decade, particularly a Court of Appeal case over a $5m fight about a lifestyle block and a separate case about a $38m golf course."
So not a Chinese Bank, at least directly. But I feel that Chinese money is behind many of these types of developments through either the banks or more informal family and friend connections.
Speaking of an area with a high number of houses built and consented in the last year - here is this weeks Hutt Valley update
Current Market Listings
625 houses on the market- increase of 9 on this time last week.
Based on the REINZ data which showed which 96 sold in Feb – 625 houses means there is 6 months stock on the market
Using the 20/21 data where 40 houses a week sold then there is 16 weeks of stock on the market
House Price Reductions
Similar to last week 270 houses have a listed price and again this week prices have continued to fall with 60% of the houses with prices having marked down their price in recent weeks by an average of 75K. Still seeing a number of houses dropping prices by 100-150K in the past week- still mainly in the $1M plus mark but around 20 properties under $1 Million have reduced their prices by 100K +.
The data continues to show the majority of houses listed are under 900K. The Median house price for all 616 listings is now 849K. (down 5K on last week)
Most sales on the market continue to be at the 800K-$1 Million mark. The big price reductions as mentioned above are in the 800K-$1.2M mark, the average reduction is $93K reduction (which is up on the 73K which was the average reduction as of the week of the 16th March ) This section of the market is usually owner occupier territory in the Hutt so may indicate people have bought and are now struggling to flick their old house off, hence the big decreases in price.
The bottom of the market is very slow with a large number of houses that have been on the market since Nov languishing there, a large number which listed at 700K + are now listing at 600K+, a handful have taken 70K+ off their original listing price which is a 10% reduction.
The 600K-800K range is typical investor/ first home buyer territory and for a savvy first home buyer could mean a 10-20K lower deposit needed now to enter the market vs at the end of 2021.
Relisting starting to occur
Seeing a number of houses relisting with new agents – one house has now had 3 agents since Nov and none of them have been able to sell it.
Seeing several houses with dual listing – they are for sale and also for rent – with the presumption that if a renter comes forward the house will be removed off the market and rented instead.
Length of time on the Market
403 of the houses have been on the market for over 30 days - 65% (last week it was 405)
243 of the houses have been on the market for over 60 days - 39% (last week it was 210)
The percentage and number of houses on the market longer than 2 months is growing each week – indicating a stagnation of house sales.
Rental Market
Meanwhile the rental market has 169 properties for rent (Down 7 on last week), but up 45 on this time last year.
Resource Consents
Hutt valley led the way in wellington for medium sized developments - they issued since the beginning of 2020 18 resource consents for 20+ units (totalling over 900 new houses) - this was on top of normal consents for single and small sized developments.
Most of these developments are well underway with a number reaching completion in Avalon/ Epuni, Waterloo and Waiwhetu and very large developments in Petone - including a 30+ and 90+ units due for completion in late 2022.
These new properties are a factor in the high number of rentals on the market which is combining with those renting existing properties that are failing to sell.
https://www.stuff.co.nz/dominion-post/wellington-top-stories/127923632/…
Thank you for your efforts. It is great to see some facts. It would be great if we had similar information from BOP and Auckland. You do a better job than the majority of paid journalists.
Those paid journalists collect their paychecks from MSM that in turn makes millions in advertising revenue from the NZ housing Ponzi.
Meanwhile I'm not for profit- the satisfaction comes from the likes :)
You've got mine !
And mine !
This needs to be a sign up newsletter.
^^^ best commenter on this website
Ikimpaul these are excellent posts and thankyou for taking the time...keep them coming
the Japanese have a management term called Gemba.... it means to go down onto the factory floor and right to the coalface to observe, learn and really understand what’s going on
Your posts very much take such an approach.
Really interesting comments charting the coming property bust.
What about the other part of the story. The completions for the same period?
For a stable population of 5m there would be under 2m households so a need for <2m homes. If a typical house lasts 100 years then <20,000 houses are needed each year just to replace obsolete/decrepit properties. Allow for houses in the wrong place (zombie towns & villages) and many modern houses insufficiently robust to last 100 years and approval for maybe 30,000 would be sensible. Bring in 50k immigrants in about 25k households and maybe the 50k approvals is about right.
Some figures suggest there could be up to 50k secondary homes (baches etc.) around the country. Add to that, tens of thousands of ghost homes held for capital gains and a rather large number of houses reserved by their owners for short-term rentals.
50k baches - to be replaced maybe every 100 years equates to 500 per year. Insignificant. Ghost houses may not be affected by price slumps.
We have a current natural increase (births minus deaths) of around 30k a year. So unless we have negative net migration we will need to house those people at least.
Natural increase is babies - 20 years to plan for their housing. Immigrant families need a house now. My guess is the govt will change the law so non-residents can only buy new houses; that will keep the building workers employed. Not like the last recession when they left for Australia.
Because our supply and demand cycles are now countercyclical, and the time it takes to get any property to consent, especially as the density and number being developed increase, then consents and then time to build completion take longer and are 'ghost' representations of the market sentiment when they were first started months or years ago.
IE just as numbers are ramping up, demand can be falling even quicker.
Once it starts - it must be completed, even if all the evidence says stop, because there is only one thing worse than a completed building with no purchaser market, ie an uncompleted building with no purchaser market.
Planners plan, councils consent, builders build, and to a point bankers lend, that is what they do. It's real scorpion and frog time.
But any smart developer will have signed as many purchasers off the plans (with price excalation clauses for the purchasers) so purchasers will have to settle, regardless of any protest on their part about not being able to get finance. Of course, the banks being smarter (it's their game after all) had already made it a condition of lending to the developer for pre-sales.
Only a few months ago if an off-the-plan purchaser wanted to walk from their contract, they may well have only faced a small % loss of their deposit. Now they will be sued for specific performance if they don't settle.
All this is par for the course in a boom and bust system, which is of the Govt/s. making.
If they had sorted this out after the last GFC, and not continued to 'feed the beast' from then on, then there would be no need for what is about to happen.
As the Govt. said to the taxpayer when they asked 'Why' as the economy drowned, 'it's what you voted for, so is just what we do.'
https://en.wikipedia.org/wiki/The_Scorpion_and_the_Frog#:~:text=The%20S….
Great comment.
Like me, you've seen this train crash coming well ahead of the vast majority.
Suddenly we'll hear all the bank economist fools talking about it as if they never saw it coming...
They saw it coming alright. They have been modelling this scenario for at least 2 years. I think they chose to drip feed the news so as not to precipitate an even more rapid crash, hence the -3% then -5% then -10% predictions - the reality will be worse than -25% from Peak.
I'm talking about modelling the impacts on the development sector. I have no idea if they've been modelling that, they certainly haven't been talking about it publicly, until very recently...
I'm really feeling a bit like John Cleese as the eccentric Scottish wizard in the Bunny Attack Scene in 'Monty Python and the Holy Grail' - 'I warned you......'
https://www.youtube.com/watch?v=TnOdAT6H94s&t=149s
Understood, I was thinking that one had a knock on to the other, I.e. falling prices reduce attractiveness of developments. They have been modelling exposure to housing debt, I would hope they also looked at the development side of the equation.
Sunset clauses may favour buyers, now. Might be some developers sweating on those, what with supply chain problems.
Could be a good opportunity for some buyers to escape and buy back in at a lower price.
Yep good point.
We've already seen some disingenuous behaviour from some developers delaying projects so they can cancel the agreement and look to sell at a higher price. Of course this is a huge double edged sword - it assumes there are buyers able and willing to buy the properties at the higher prices....
It's as clear as daylight for people like Dale and me who have been in and around property development for a long time as to what's going to happen. I've been warning about it for close to two years. Despite that, I have acquaintances who have gone ahead with development, despite my warnings. At least one of them is in big strife.
Well, they were warned...
You took the words out of my mouth HouseMouse. Oh well, back in goes the smashed avocado on toast.
It’s the less experienced “mum n’ dad” type of developers who will get badly burned. The smart money has gotten out already.
Having said that, some long established and large developers and building firms will also go under, if past experience of NZ’s boom and bust building sector is any guide. When there is a slowdown many building workers also move overseas for work, mainly to Australia,exacerbating the boom and bust cycle.
If this government is smart it will step in to ramp up social housing construction in order to keep builders here and mitigate the worst aspects of the bust. There are some indications they may actually do this.
Well the only buyer who doesnt care about how much it costs to build, is the Government. They will probably pick up a few half built developments and turn them into gang infested ghettos.
Very, very seldom do sunset clauses favour buyers, and they are usually related to some very specific clause with a long time frame eg 'if the developer cannot get Resource Consent within 5 years,' etc.
The reality is buyers have been in a FOMO market for so long, they don't even ask/want or would get normal due diligence clauses, and the capital gains were always good enough that even if you bought badly, you could still resell at a profit.
Exactly.
Well, the tide has well and truly turned.
It's gonna get very ugly.
At what point does a greenfields developer start marketing/selling properties "off the plan"? Is it after all the pipes, comms, power, roading, kerb and channel etc are installed?
It can be immediately. Just subject to everything under the sun.
As soon as you start digging, its' not a Greenfields development anymore.
If you have control of the costs, but think the market may weaken by the time you have finished building, and the market is hot right now, then you do it as soon as possible. In fact, it is easier to sell the 'Greenfield' with the nice images of the finished product, than it is when you start digging everything up.
Greenfield sales do a couple of things.
1) They tell you first if what you think will sell at a certain price will sell. IE why would any developer build anything if there was no market for it. Some markets or market potential are obvious or undersupplied, others aren't. The developer, banks etc. are all taking their signals on how they act from the purchasers, You have basically said to them, not only would I buy it if you build it, BUT I will buy it before you build it. So as the purchaser, don't give any excuses once they have built it, that you have changed your mind. The developers and banks were only following your market orders, at least that is the way they see it.
2) They spread the bank's risk from one big debt owned by one developer to a whole lot of smaller debts owned by many. So if the shit hits the fan, total default % is less and the total asset base to recover any default is greater.
.
Ireland 2.0 in the making?
I would be more interested to see the number of Certificates of Occupancy issued. From what I see in Christchurch, a lot of places that were sold off the plan a year ago still have not had a single spade in the ground yet. Consents are a fine measure if you are a Labour politician (look at me, arent i doing a great job?) but completely meaningless when it comes to actually delivering real houses for people to move in to.
I've also noticed a number of half built projects now being advertised for sale, rather than waiting on completion. Good luck selling those.
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