The number of new residential building consents issued nationwide in February was almost unchanged compared with a year ago, although it was up 13.7% in Auckland.
Statistics NZ said consents were issued for 1758 new dwellings in February, including 160 apartments, which was down marginally on the 1768 new dwelling consents issued in February last year but up 14.2% on the 1542 consents in February 2013.
In Auckland, the country's largest housing market by far and the one that is facing the greatest housing pressures, consents were issued for 528 new dwellings, up 13.7% on the 464 issued in February last year.
However on an annual basis that is equivalent to less than 6500 new dwellings a year being built in the region, which is around half the estimated number of new homes required to keep pace with the region's explosive population growth.
With immigration levels continuing to run at record highs and new housing starts failing to keep up with demand, the latest figures suggest Auckland's housing market will continue to tighten.
Significantly only 84 of the consents issued in February were for new homes in Papakura and Franklin on the city's southern flank, where property values are lowest.
The biggest number of consents issued were for 149 homes within the boundaries of the former Auckland City Council, where property prices are high.
That suggests that very few of the new homes likely to be built would be affordable for first home buyers or people on low incomes.
Around the rest of the country, Christchurch was the only place where the number of consents issued was above 100, with 333 new dwelling consents issued in February, compared with 301 in February last year.
There were 84 new consents issued in Hamilton, 77 in Tauranga, just eight in Napier, 22 in Palmerston North, 22 in New Plymouth, 48 in Wellington City and 18 in Dunedin.
Statistics NZ said that after showing growth since March 2011, the number of new consents being issued was now showing signs of decreasing.
Nine of the country's 16 regions had fewer consents issued in February than a year earlier, with the biggest falls occurring in Taranaki, Otago, Bay of Plenty and Canterbury.
However the value of non-residential building work, which includes shops, offices, factories and public buildings such as schools and hospitals, was up strongly compared to a year earlier.
Consents were issued for $469 million of new non-residential building work in February, up 28.1% compared with the $376 million in February last year.
In a First Impressions newsletter on the building consent figures, Westpac senior economist Michael Gordon said the trend in building activity had noticeably softened in recent months.
"The decline has been most prominent in Canterbury," he said.
"Of course the finite nature of the post-quake rebuild means that the level of activity will eventually peak and decline, but we've had no feedback to suggest that that point has been reached already.
"Consents in Auckland have fared better, though volatile from month to month due to the greater prevalence of apartment unit consents in the region.
"However the pace of growth appears to be slowing and the number of consents is still well short of what's needed to meet population growth."
Building consents - residential
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15 Comments
Auckland and Canterbury are basically growing at the same rate at just over 500 consents per month, pretty impressive for Canterbury given it is only 40% of the size of Auckland and has sent half of its transport taxes elsewhere for the last decade.
I wonder how fast Canterbury could grow if given a proper chance?
Greater Chch is becoming oversupplied with new homes in the 500 to 700 range in subdivisions. They are harder to sell and prices are softening. Expect to see fewer mid range spec builds in the coming year. Top and bottom ends seem in reasonable demand still.
Rental demand in Chch has definitely peaked as well.
We are now five months into the second year of the Auckland Housing Accord. How are we doing?
Not so good. So far Auckland has consented 3,198 dwellings (Oct14 - Feb15). At the current rate of construction Auckland will consent 7,649 dweliings in the second year of the Accord, not quite 300 more than the previous year.
Auckland Council's Housing Action Plan on which the Housing Accord is based requires 13,000 dwellings to be built each year to meet demand for new stock plus make a gradual dent in the chronic over-crowding and under-housing situation. That plan was written befiore the Australian economy tanked and Aucklanders decided not to leave for the Gold Coast. so now 13,000 new dwellings is required just to handle population growth and makes no dent in the backlog.
But Auckland is only puddling along at 59% of their own target.
When are Auckland Council and the Nats going to be honest with New Zealand and admit this strategy is a complete failure?
From memory any developer that got a sizeable subdivision consented inside the Special Housing Areas had to build x% of dwellings in the affordable price bracket ($450K?). And of course pass that subsidy onto the buyers of the other houses.
Given that virtually no building activity has taken place yet in the SHA's apart from what was already underway before the Special Housing Accord legislation was passed, you can safely assume none. Remember SHA status got wrapped around Hobsonville, Weymouth and an extension of Botany Downs (?) where planning and/or development was already seriously advanced.
Almost all of the wins claimed by Auckland's HPO and MBIE are just development that would have happened anyway even if AC and the government had done nothing,.
OK, let's bullet-point a few possible reasons: it's likely to be a combination of several, according to circumstances.
- Buyer resistance to increasing prices: this is a construction-costs issue, not an outright prices-asked one.
- Bank conservatism about lending to the lower end of the market (which by definition is both larger numerically and poorer cashically)
- Builder caution about building anything at all in an environment of increasing regulation, industry credentialism and company failures
- Developer caution about dealing with arbitrary, costly and capricious demands from TLA's, regulators, NIMBY's and their consorts: lawyers, accountants and consultants.
Any two is likely to be close to a perfect-storm scenario....
add to that - Since the last building boom the Government has reduced depreciation that investors could claim on rental property. In the last property building boom I recall many investors deciding to build because their depreciation claims on new builds were quite high compared to claims on existing property.
Interesting the 13,000 build target is about what Auckland built in the 2002 to 2004 year period. But that wasn't enough to stop the 2000's price boom. So if Auckland is only building 59% of that target what will happen to prices?
Given interest rates are so low why is there not a supply response like England experienced in the 1930s? A doubling of supply. Why is housing supply in Auckland so inelastic?
"Obviously, for the cheap-money policy to work it needed to stimulate demand – a transmission mechanism into the real economy was needed. One specific aspect of this is worth exploring, namely, the impact that cheap money had on house-building. The number of houses built by the private sector rose from 133,000 in 1931/2 to 293,000 in 1934/5 and 279,000 in 1935/6 – many of these dwellings being the famous 1930s semi-detached houses which proliferated around London and more generally across southern England."
"So if Auckland is only building 59% of that target what will happen to prices?"
I reckon causation flows the other way. The development/construction industry only produce what they can sell. When undeveloped land with planning permission attached is so expensive there is a limited market for the final product.
If developers could develop sections at $100K instead of $475K the construction industry would outstrip dairy for the next 30 years. And be better for both the economy and the environment. But Smith and Brown know best. Eh?
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