The total value of building work consented has declined by more than $5 billion a year over the last two years, according to the latest figures from Statistics NZ.
These show that $26.859 billion of building work was consented in the 12 months to September this year. That's down from $29.741 billion in the 12 months to September last year, and $32.350 billion in the 12 months to September 2022.
Most of the decline was for residential building work, with the value of residential consents dropping from $22.963 billion in the 12 months to September 2022, to $17.732 billion in the 12 months to September this year. That's a decline of $5.231 billion a year (-22.8%) over that two year period.
That saw the number of new homes consented decline by 17,055 (-33.6%) over the last two years, from 50,732 in the year to September 2022, to 33,677 in the 12 months to September this year.
The value of consents issued for non-residential building work, which includes commercial buildings such as shops and offices, as well as non-commercial buildings such as schools and hospitals, declined only slightly over the same time period. It dipped from $9.387 billion in the year to September 2022 to $9.127 billion in the 12 months to September this year, down just 2.8% compared to two years ago.
However, the value of non-residential building work consented may have been propped up by inflationary pressures in the building industry, because the total floor area of non-commercial buildings consented declined from 3,197,000 square metres in the 12 months to September 2022, to 2,293,000 in the 12 months to September this year. That's a decline of 904,000 square metres (-28.2%).
The charts below show the long term movements in residential building consents by region and type of dwelling.
Building consents - residential
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Building consents - type
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8 Comments
I hope this will result in the building material wholesalers and retailers sharpening their pencils and actually becoming very competitive (which has been missing from the building industry for many years).
The markups on basic building/plumbing/electrical materials has been borderline price gouging/fixing.
It will probably do the opposite, many will go under.
The boom bust building cycle really needs to be stopped, the government should start building ASAP to pick up some of the slack (but not competing with private). We need counter cyclical investment in housing and infrastructure.
Reality is that new builds are going go continue to decline.
They talk about building more houses so it brings down prices.
Reality is that you can not make the numbers work ever again, to build to rent out.
The return is just not there unless rents double which is not going to happen.
Existing houses is where the rentals are going to remain and rents will continue to increase, as there will be a shortage in a couple of years.
My observation is that a decent chunk of the construction still happening is by Chinese developers with full Chinese crews. Having had one or two encounters with these sorts of operators, the crew will be getting paid pittance (minimum wage at best), and that’s how the developer will be getting it to work. Along with the use of cheap Chinese materials and fittings.
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