Consents for apartments push residential building consents higher in December, annual consents highest since 2008

The volume of new homes granted consents rose 9.4% in December from November boosted by apartments, Statistics New Zealand says, with annual consents reaching their highest level last year since 2008.

However, when consents for non-apartments are stripped out of that seasonally adjusted December figure, consents for new houses actually fell 1%, Statistics NZ's industry and labour statistics manager Blair Cardno said.

"Apartments boosted the increase in new housing consented last month," said Cardno. "In December, 232 new apartments were consented, and just over half of these were in Auckland and Wellington."

"Since the latest low point in March 2011, a clear trend has emerged showing an increase in new houses, both including and excluding apartments."

Housing consent numbers for December 2012, compared with December 2011, were: 1,381 new houses, including apartments, up 23%, 1,149 new houses, excluding apartments, up 17%, and 232 new apartments, up 57%.

By region the biggest number of new houses in December came in Auckland, up 140 year-on-year. Meanwhile, earthquake-related building consents in Canterbury were worth NZ$45 million last month with NZ$42 million for residential buildings.

Over the 2012 calendar year, versus 2011, the number of consents for new houses rose 3,267, or 24%, to 16,929. This is the highest number of new consents in a calendar year since 2008.

The regions with the largest number of new houses consented on an annual basis were: Auckland, up 810, or 21%, to 4,582, and Canterbury, up 1,642, or 69%, to 4,037.

ASB economist Christina Leung pointed out that since the September 4, 2010 Christchurch earthquake, earthquake-related consents have totaled NZ$793 million. But given this estimate only takes into account direct repairs and reconstruction on damaged sites, Leung said the true extent of rebuilding is likely to be greater.

"For example, a new house built somewhere else as a result of the demolition of a damaged house would not be included as an earthquake‐related consent," said Leung.

Overall she said house-building demand continues to recover, underpinned by Canterbury rebuilding and increased demand in Auckland.

"We expect these pressures will encourage further house-building demand over the coming year. However, it will take some time for the pick-up in recent building activity to flow through to new housing supply. Given the continued increase in housing demand, we expect housing market pressures to remain over 2013."

From the Reserve Bank's perspective Leung said the strength in the housing market presents a dilemma.

"Signs of slowing momentum in the wider New Zealand economy mean the Reserve Bank will be unlikely to want to use higher interest rates to lean against the housing market. The Reserve Bank has indicated a preparedness to use macro-prudential tools such as Loan to Value Ratios, with the potential for these tools to be used later this year if the disconnect grows between housing credit growth and the wider economy. We expect the Reserve Bank will hold off raising the Official Cash Rate until March 2014."

See the full release from Statistics NZ here.

(Update adds comments from ASB's Christina Leung).