The residential construction industry now looks to be heading into a serious decline, with the number of new dwellings being consented down on a monthly, quarterly and annual basis compared to the previous comparable period.
According to Statistics NZ, 3402 new dwellings were consented in June this year, down 15.7% compared to June last year.
In the June quarter of this year, 9888 new dwellings were consented, down 20% compared to the second quarter of last year.
In the 12 months to June this year, 44,529 new dwellings were consented, down by 6207 (-12.2%) compared to the previous 12 months.
On an annual basis the biggest decline has been in stand alone houses, with 5415 fewer (-22.6%) consented in the year to June than in the previous 12 months, followed by townhouses and home units -7.1%.
The year to June was the first time that the number of townhouses/home units consented has exceeded the number of stand alone houses consented in the June year.
Going against the trend were apartments +2.8% and retirement village units +19.6% in the year to June.
The total value of new dwellings being built is also starting to decline, even though inflation may be pushing up building costs.
In the 12 months to June the estimated total value of the of new residential building work for new dwellings was $18.947 billion, down 5.2% compared to the previous 12 months.
The four regions with the highest number of new dwellings consented in the year to June were Auckland with 19,085, down 12% on the previous 12 months), followed by Canterbury on 7838 (-9.2%), Waikato 4265 (-16%) and Wellington 3356 (-14%).
The interactive chart below shows the monthly trends in building consents by dwelling type.
Building consents - type
Select chart tabs
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27 Comments
Supply tanking, demand spiking.
Neither of these is remotely close to being true yet. Maybe in two years time but that's far from certain in such a changeable environment.
Not sure where you get demand spiking, thats a year or more away when rates start dropping
Kianga Ora will sure up any demand wobbles, only show in town in certain areas
They only want newish builds, not the 1960s tired old box that the average landlord is trying to unload.
Hmm... supply and demand, what will that do to prices? We see what it does to eggs, shipping, you name it....
The Demand will hop on a one-way plane, and be in Brisbane applying for a job to build the Olympic Village, in no time at all. Adding to more Supply across the board as they depart. Probably preceded by the doctors and nurses to treat them if they have a need, and the teachers to teach their children.
New Zealand has priced itself out of the lifestyle it thinks it is entitled to. Rubber and Road come to mind.
Those young that remain, will both be working full time to pay off the mortgage, fund capital expenditure on neglected crumbling public sector assets, and carrying the burden of non-means tested superannuation as today's retirees live to their 90s.
Meanwhile, they'll cop flak for putting nan and pop in a home, rife with abuse from low wage caregivers imported from third world countries.
Aus is calling... they are making it easier to get across the tasman, and sift out the baddies
Bring back JK, he can turn around the drift west.... sarc
Don't forget "access to capital" in your calculations. Access to capital isn't improving significantly (it's getting worse, as mortgage rates continue to rise). Demand can be very high but prices still dropping, as the market adjusts to the lack of capital available to the demand side of the equation.
Bubbleland on the horizon.
construction might be 20% down but it is still higher than all monthly consent pre mid 2020
True.
But it could easily drop a further 15-20%.
Resource consent volumes at Auckland Council are down about 40-45% in 2023. They are a leading indicator. Building consents are lagging indicators.
Consents are still elevated, it’s the intention to build that will be down.
The development margins are just are not there due to build costs. As a country we need the cost of materials to reduce significantly.
It's actually the labour costs that are over the odds. Not the actual wage or salary, but the amount of labour being expended relative to the output.
Compared to wages house price’s are still way to high, so many people living in crowded housing or cars the system will break soon, government should be pouring cash into building housing and renting out cheaply.
So what, at like a 1-2% return?
That's actually still a high level of consents. More than enough to keep up with demand although some places like Tauranga, New Plymouth and Queenstown have been and are consenting/building at a low level causing rents to spike higher and house prices not to fall very much.
In the meantime immigration is up to 100,000, so who is going to get turfed out of their bed to make room for them and where are they going to live? The photo gives a strong hint.
At the risk of repeating myself. Young Kiwis, there is absolutely no hope of you ever owning a home here.
Your only hope is to leave NZ for good.
by Chris-M | 1st Aug 23, 2:33pm
In the meantime immigration is up to 1000,000
A million extra people is indeed a lot! ;-)
Whoops. Thanks for that. I will correct it.
In Lincoln there are a large amount of sections not selling, let alone being built on. This is as many more sections closer to Christchurch are coming onto the market in places such as Halswell.
Just to be nosey, I enquired on a 400m2 section. Vendor welcomed enquires over 550k. Personally, I think that’s rather on the pricey side...
Many thought after the Chch rebuild there’d be a bust. Didn’t happen due to a lowering of interest rates and nationwide over- exuberance.
Today, signs aren’t looking promising for tradies, but we’ve been wrong before.
Ah and so the cycle resumes. Upward pressure on prices from less supply is sure to follow.
Pretty predictable isn't it. Who couldn't see this coming with rates rises and building materials and Tradies wages skyrocketing. Next step is change of government, more people continuing to come in rents will rise, house prices will increase while the RBNZ does nothing = Strong Growth so nothing to see here.
The worst is yet to come. Most group building company sales are down 60-70% from their peak. Some franchisees haven't sold a house in over a year.
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