Fewer homes are being built and they are taking longer on average to be completed

The pipeline of residential building work in Auckland is becoming decidedly sluggish.

That's because fewer new homes are being consented in the region and those that are being consented are taking longer on average, to be built.

That means new builds are spending longer in the construction pipeline, meaning fewer of them are coming out the other end each month.

The latest figures from Statistics NZ show that 13,863 new dwellings were consented in Auckland in the 12 months to October 2024, down from 16,669 in the 12 months to October 2023 and 21,960 in the 12 months to October 2022.

That's 8097 fewer homes consented (-37%) over the last two years.

Fewer homes being consented means fewer homes being built, but that's only half the story.

A rough rule of thumb has been that it takes about two years from the time a new dwelling is consented in Auckland until it is completed and issued with a Code Compliance Certificate (CCC).

CCCs are issued by councils when a building is completed, unlike consents which are issued before construction starts.

Which makes CCCs a very reliable indicator of new housing supply.

Back in 2019 it was certainly true that nearly all of the new homes being built in Auckland were completed within two years of receiving their consents.

Auckland Council figures show that in 2019 more than 90% of CCCs were issued to new dwellings that had received their consents within the previous two years - in some months it was as high as 98%.

But that figure has been in steady decline ever since.

Initially that was due to Covid pandemic restrictions, and then the subsequent disruptions to supply chains and the labour market that followed.

But even though those problems are now in the past, the length of time between consents being issued and CCCs being issued on completion, continues to increase.

By October last year the number of new dwellings receiving their CCC with two years of their building consents being issued had dropped to 65%, down from more than 90% in 2019.

With supply chain problems no longer an issue, the most likely explanation is that developers are increasingly delaying the start of construction on consented developments due to the difficult housing market.

A small time builder/developer who may have been planning to build a couple of townhouses on spec, may hold off until he has buyers lined up for them.

Larger developments may now be built in stages rather than all at once, and so on.

This, combined with the general downturn in consents being issued, is resulting in a general sluggishness in the market.

Interest.co.nz compares the number of new Auckland dwellings receiving a CCC each month with the number of consents issued two years previously and the result is shown in the first graph below.

We also record how many dwellings were consented each month but not completed within two years, and aggregate the figures to get an annual total - this is displayed in the second graph below.

The second graph, which shows how many consented dwellings were uncompleted after two years, shows a particularly striking trend, rising from almost nothing in 2018 to around 4000 a the year to October 2024.

Both graphs suggest residential construction in Auckland is continuing to slow and along with it, the supply of new homes.

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