The number of new homes in the construction pipeline continues to decline while the cost of building them appears to be stabilising.
The latest figures from Statistics NZ show 39,900 new dwellings were consented nationwide in the 12 months to October, down 20.6% compared to the 50,252 consented in the 12 months to October last year.
The decline affected all dwelling types with the biggest decline for stand alone houses -26.2%, followed by apartments -24.6%, townhouses and home units -16.2%, and retirement village units -3.1%.
The slump in planned residential construction affected all main centres led by Auckland -24.1%, Hamilton -12.0%, Tauranga -21.0%, Wellington City -4.8%, Christchurch -16.1% and Dunedin -12.2%.
While those figures suggest an imminent slowdown in residential construction work, the latest building costs figures from Quotable Value suggest recent cost increases are moderating.
According to the QV CostBuilder database, the average cost of building a standard three bedroom home in New Zealand increased by 4.9% over the year to the end of November. That's down from 11.3% in the year to November 2022, and 14.7% in the year to November 2021.
"Construction costs have all but stabilised throughout the second half of this year. reflecting a somewhat improved economic outlook internationally and an easing in the global supply chain issues that arose throughout the Covid-19 pandemic," CostBuilder spokesperson Martin Bisset said.
Movements in costs were mixed for different materials and building processes, with the costs of framing and substructure down 4% and 2.9% respectively due to reduced steel costs, but drainage and roofing costs up 5% and 2.8% respectively.
The biggest trade price change was for reinforcing steel, which drooped 16.9%, largely due to a more favourable exchange rate, while infrastructure costs were up 7% due to higher plant hire and drainage costs, with demolition costs also up 5.1% due to higher plant hire and tip fees.
"Fuel costs have largely stabilised for the time being, inflation is in slow decline and interest rates are expected to be at or near their peak," Bisset said.
"These factors and others, including increased migration helping to fill labour shortages, are currently keeping rising costs in check," he said.
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49 Comments
Actually seems like a really small drop relative to how low new house starts are looking.
Seems like there's going to be 1-2 years under-building, with commensurate hair on fire afterwards and not enough capacity to cover the shortfall.
Building inflation has disappeared (not surprising with demand falling), so has food inflation. The economy is quite obviously cooling and unemployment is rising. Overseas inflation is dropping substantially.
Yet our OCR needs to be at 5.5% all next year? Seems unlikely to me.
Immigrants. Don't even need a job to come here. Just pay your master your life savings, and you're in the country. Then demand services. And food. And accommodation.
As long as INZ keep rubber-stamping all and sundry, that's not likely to change.
They've done nothing but let in riff-raff since 1850
Hey wait.....
Someone has to fund the lifestyle of those who were born here, don't want to work, and expect those same services.
Can't we just get paid more to do the same (or less) given the lack of people?
There's an awful lot here who don't want to work, born here or not, this is true:
~140k on a main benefit (exc. those with disabilities).
~640k 'solely' on super (though it's collected by another 320k who work as well, and who knows how many are collecting passive incomes).
So .. which group are the immigrants paying for?
* figures based on rough workings of rough estimates from stats/msd.
Retirees?
Three quotes for Frames & Trusses: All priced from same plans
1. $28,600.00
2. $26,500.00
3. $20,650.00
Inflation has slowed but definitely still occuring
Take the middle one
Why?
After having dealt with hundreds (maybe thousands) of quotes myself, and giving oversight to body corps and companies for their own tender selection, a rogue cheap price has a very high likelihood of complications. Either poor quality, or an inability to perform to specification.
The kiwi thing to do is take the cheapest one and exert more time and energy trying to make it right than just picking a reasonable price in the first place.
agree on this but I would ask for 2k off that middle price... if they say no ask for 2k off the top price
ALWAYS drive a deal until you are buying 1 a month then you can trust but check the quotes
how many square meters house, what part of the country, look about right for radiata pine, 100 square meter house
I'd love to know the number of non-HNZ building consents. I believe it's through the floor.
When I commented on the RBNZ hawkish stance, saying I wasn't buying their rhetoric, another poster - I believe it was Retired Tall Poppy - accused me of wishful thinking.
It's not, I think there is a lot of economic pain coming domestically from a large chunk of our GDP drying up through building work declining and the Chinese economic woes. We will see rents spike significantly at the same time which is going to apply serious pressure on cost of living. Grant Robertson will be quietly happy he's not around to clean up his own mess.
The RBNZs forecasting usually precludes guessing when things turn to custard, probably for good reason (no one's good at defining the timing of these things). So they plod along expecting things to move in a linear fashion, and then react when there's a significant shock.
The HNZ projects are crazy - 6 dwellings going up on the same piece of land, each a different design and layout.
These stats will worsen further, especially with interest rates HFL and a new govt pulling back further on KO builds.
No one can say it wasn’t coming
Did you mention this possible collapse?
😂
The real question is, will construction costs come down?
Most houses are uneconomic to build and a reduction in land value won’t cover it.
IMHO suppliers will hold prices where they are and just accept lower volumes. There have been a massive increase to the supplier cost base too so reducing prices will force many under.
Unfortunately we are a high wage/cost economy with low productivity and it is unlikely to change.
IMO one of the biggest challenges is we are letting regulatory bodies and architects dictate what gets built. Neither of those two areas know much about efficient and appropriate construction methods.
Architects are generally pretty hopeless. I could rant all day about how most of them have no idea about energy efficiency and thermal comfort, or if they do then these key liveability factors come down the pecking order, relative to aesthetics.
To be fair, even people putting too much effort into energy efficiency or thermal comfort are straying too far from "hey let's build a functional house as affordably as possible".
We worked out how to build houses for NZs conditions 100 years ago, plenty still standing. Just upgrade the design to include double glazing and wall insulation, job done, build the damn houses.
They don't fit on current sections. In Auckland you need an architect to design something big enough that meets all the height to boundary and setback requirements, normally some weird shaped 2 story thing.
Also everyone wants an ensuite / rumpus / covered deck / butlers pantry / etc these days.
In the early 20th century, NZ had a massive shortage of affordable housing. So the government instituted a massive house building scheme that saw thousands of houses built for both the state and private home owners. Same materials and joinery used in pretty much all of them, and they scale from around 80m2 to up to a couple hundred.
Not much reason we can't do the same thing now. Actually we have lots of reasons, but they're mostly ideological, and pretty dumb.
Disagree. Most of our houses definitely weren’t built to our conditions. In terms of insulation and other things
Some of thats due to the technology of the time though, not design. About the only silly thing about them were ones with 3m or higher stud height.
A weatherboard house with soffits (i.e. the standard NZ design of the early 20th century) is infinitely better than a flat surfaced house with no eaves.
Back then remember, they had plenty of forest still standing to burn to keep warm. People wore a lot of wool and dealt with the cold as there wasn't any other alternative but coal to burn, and if you can burn coal then who needs full insulation as coal produces so much heat and was dirt cheap. Today we all want something that sits at 18-25 degrees year round indoors with minimal heating, which is a hard sell to most given the age of our housing stock and current cost of renovations.
In the real world, the real economy, time is money.
Consultants that bill for time have no idea how this works.
We worked out how to build houses for NZs conditions 100 years ago, plenty still standing
However 100 years ago they could simply rip out centuries-old hardwood natives with tight rings, high resilience, and build houses, even basic ones, that are still standing as the material quality they are built from was extraordinary. Today we have nothing but treated pine and the odd bit of steel frame, plus magnitudes more regulations in place and more people around trying to extract maximum cost from minimal effort.
Many years ago I was employed to write software for a cabinetry business - the sole purpose of which was to vet architect plans before they got to the CNC, as they were often poorly specified with dimensions that didn't work. It was fun. The architects, however, didn't like it - 'what do you mean, 85+25 doesn't fit in a 100mm gap?Why should I have to do this work?' - sadly I'm not joking.
Architects are a funny breed, I’ve found a very over inflated sense of self importance even when being delivered a proverbial pie in the face 🫠
A funny breed indeed 😂 . Correct on the self importance
Some architects are shockingly bad. I went through a house designed by a well known one on the weekend, and the design flaws were obvious. They put the cooktop in the butlers pantry instead of in the kitchen, so you'd have to stand in the pantry all night cooking your food instead of talking to the rest of your family at the kitchen bench. The window in the bathroom was unable to be opened, and the lack of ventilation was causing damage to the ceiling. And in the lounge, the french doors opened out to .... the 1m boundary fence, while there was another floor to ceiling non opening window looking out to the terrace.
There’ll be no such thing as affordable housing with the building code the way it is.
We can build the fastest yachts and rockets too!
but an affordable house?
a racket if ever I saw one
Oversupplied already? A 7 month old townhouse on my street has been vacant for 6 weeks now.
No carparks?
It has one off street uncovered car park. Its in a very good area, close to great shopping, and in the premier school zone. 7 months ago when the others were leased they went pretty quickly. Now its like crickets. So many similar places on the market though.
For sale or rent?
For rent. Which raises interesting questions about Christchurch's population growth. Are the numbers moving out to Selwyn and Waimak greater than the numbers moving in to Christchurch central? Owners of these types of properties are going to suffer when investors return to buying older units, which rent for less, and have backyards and garages.
On the subject of selling, there is another developer with a couple of townhouses that he has been trying to sell since July now with no luck. They are quite nice ones too, even have a garage. Only 3 on the site. Great location. They were originally being sold by an agent, but now the developer has "cut out the middleman" and dropped the price, included a $10k furniture package, and still nothing. Of course they have lost their interest deductibility premium now and will need to be price competitive with the resales of pre-2021 townhouses.
Auckland -24%. Ouch. I expect the slump in consents to get to circa -35% from peak
Drive around Milldale at night ie 8pm-9pm and see how many lights are on, do this monday-wednesday - I think there may be some pain to come...... they call this doing due diligence, RE's hate it
I have a weird desire to drive all the way there to
observe it now 😂
I will do next few days and post a youtube, its a GREAT suburb compared with flat bush, but its overpriced.....
Nice
so they switch the lights on on Thursday / Friday nights thinking some open homers might have a squizz then before the weekend, to make it look like houses have sold like hot cakes?
From what I can tell at least 15% overpriced
this deal is so good they are letting you have it........ wait a minute
https://www.bayleys.co.nz/listings/residential/auckland/rodney/8-moenui…
I wonder if Orr and the gang are aware there's another wave of construction sector redundances in the pipeline for next year. As an anecdote, an electrical company I know of with 25 staff just laid off 10. That's almost half their workforce. And there will be many others sitting with their fingers crossed hoping it's going to pick up very soon or they will have to cut staff or even close the doors.
I find it incredible that what's going on in construction at the moment continues to fly under the political and media radars.
They've been too busy reporting on themselves for the last 6 years. Funny, being a party that is meant to have its fingers on the worker pulse of the nation.
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