The current headwinds facing the building industry do not appear to be denting the optimism of property developers, with $2.62 billion of new building work consented in July, up 4.1% compared to July last year and up 27.5% compared to July 2020, according to Statistics NZ.
That took the total value of new building work consented to $31.571 billion for the 12 months to July this year, up 16.9% compared to the previous 12 months.
That included 4100 new homes consented in July plus another $213 million of residential alterations, which took the total value of residential building work consented in July to $1.928 billion, up 6.9% compared to July last year.
In the 12 months to July $22.585 billion of residential building work was consented, up 18.0% compared to the previous 12 months.
On top of that another $691 million of non-residential building work was consented in July, down 2.9% on July last year but that took the value of non-residential work consented in the 12 months to July to $8.986 billion, which was up 14.1% compared to the previous 12 months.
While those numbers suggest a substantial pipeline of work is being created for the construction industry for at least the next two years, there are also signs of pressures building in some segments of the market.
The most noticeable of these is in the construction of stand alone houses.
The number of stand alone homes being built has been in decline for some time as developers and buyers increasingly turn towards more affordable multi-unit dwellings such as terrace housing and home units.
In July just 1730 stand alone homes were consented throughout the country, down 25.3% compared to July last year, while 1853 townhouses and home units were consented, up a whopping 47.8% comparted to July last year.
One of the challenges currently facing stand alone housing developers is that baby boomers with an eye on retirement are an important part of this market, and they are likely seeing the value of their existing homes decline while developers and builders of the new homes they are keen on are facing rising costs, putting a squeeze on development margins and pricing options.
On the commercial property front there was a very sharp drop in the amount of new storage buildings such as warehouses consented last month, with the value of consented work for that type of building down 21.9% compared to July last year.
However the monthly numbers for commercial building consents can be very volatile, so it's too early to say if that is just a monthly aberration or the start of a longer term trend.
A more detailed quarterly analysis of regional building consents, including average build cost and cost per square metre is available on our Residential Building Consent Analysis page and our Commercial Building Consent Analysis page.
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