The residential construction industry looks set for a serious downturn with the number of new dwellings consented in February down 29% compared to February last year.
February was the fifth month in a row that the number of new homes consented has been below the same month of the previous year, bringing an end to a spectacular 11 year run of increasing residential construction.
On an annual basis, 48,257 new dwellings were consented in the 12 months to February this year, down 3.3% compared to the previous 12 months.
Although the decline was small, it was the first time that the number of new homes consented has declined on an annual basis (February year) since 2012.
However over the same period, the number of new homes consented annually has increased by 342%, spawning a building boom that has propelled the construction industry into one of the mainstays of the economy.
A slowdown in residential construction activity later this year and into next year as existing projects are completed, now seems all but inevitable.
The estimated economic impact of a slowdown in residential construction can be seen in the building cost estimates of the new dwellings consented, which was $1.313 billion in February this year, down by $332 million (-20.2%) compared to February last year.
The decline in February consents compared to a year ago was across the main housing types of standalone houses -33.2%, apartments -19.3% and townhouses/home units -36.9%, with retirement village units the only sector to show ongoing growth, with consents up 78.9% in February compared to a year earlier, although on an annual basis retirement village units were only up 10.9%.
A slowdown in non-residential construction is also on the cards, with the total floor area of non-residential buildings consented down 9.0% in the 12 months to February compared to the previous 12 months.
The total value of all building work consented (residential and non-residential) was $2.444 billion in February, down 7.2% compared to February last year.
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