New dwelling consents gathering real momentum in Auckland

Property

New dwelling consents were at elevated levels in Auckland last month, but down in most other main centres

30th Aug 18, 11:20am by Greg Ninness

The volume of new dwellings consented nationwide was steady in July, with Auckland consents particularly strong and other centres weaker.

The latest figures from Statistics NZ show 2752 new homes were consented in July, broadly in line with June when 2792 were consented, and with July last year when 2762 new homes were consented.

But the news was more upbeat in Auckland where the housing shortage is greatest, with 1250 new homes consented in the region, up 24.9% compared to June and up 61.5% compared to July last year.

New dwelling consents in Auckland have been above 1000 per month for the last five months and above 1100 for three of those months.

That is the first time consents in Auckland have ever been above 1000 per month for five consecutive months, according to Statistics NZ data, suggesting residential development activity in the region is starting to gather some serious momentum.

The highest level of new consents within the Auckland region was on its more affordable southern flank, with 256 new dwellings consented in the Manurewa-Papakura ward in July, followed by Albany at 223, Waitemata and Gulf 182 and Waitakere 119, with the rest spread throughout the region.

However consents eased back in other major centres with July's numbers down in Hamilton, Tauranga, Wellington and Christchurch.

The figures show particularly strong growth of medium density housing compared to other forms of construction, with the number of townhouses and home units consented throughout the country July up 52.9% compared to July last year, while the number of stand alone homes consented throughout the country was down 8.9% compared to July last year.

On an annual basis, the number of townhouses and home units was up 26.1% in the 12 months to July compared to the previous 12 months, apartments were up 36.7% and stand alone houses were down 1%.

The interactive charts below track new dwelling consents issued in all regions of the country since January 2000.

Building consents - residential

Select chart tabs

Source: Statistics NZ

Building consents - type

Select chart tabs

Source: Statistics NZ

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31 Comments

by PropertyPrices2Fall | 30th Aug 18, 12:48pm 1535590122

low sales and increasing supply = falling prices!!!

by THE MAN 2 | 30th Aug 18, 12:56pm 1535590592

New houses being built around NZ will increase prices.
If there are too many built in Auckland where there are so many people that aren’t earning or receiving enough money to live then yes they may reduce slightly.
Wouldn’t be holding your breath though waiting for prices to drop heaps as you will be long gone!

by nymad | 30th Aug 18, 1:02pm 1535590966

New houses being built around NZ will increase prices.

That's an interesting theory.
Care to elaborate why this wasn't the case in your Christchurch hometown after the rebuild started?

by PropertyPrices2Fall | 30th Aug 18, 1:43pm 1535593424

he doesnt think much before blurting..

by waymad | 30th Aug 18, 1:56pm 1535594200

Simple explanation: the LURP threw the doors wide open to Mo' Land Availability, the TLA's vigorously competed amongst themselves for new ratepayers, and the insurance payouts gave homeowners with ruined houses the wherewithal to finance a new build without a nose-bleed-high mortgage. Hence plateau'ed and affordable houses and plots: plot prices start with a 1, house+plot with a high-3 to mid-4.

It's a great example of how lack of land strangulation via planning, hence Supply, allows Ms Market to weave her wicked ways with Price.....

by nymad | 30th Aug 18, 2:31pm 1535596304

So you mean building new houses reduced prices?!

A miracle!

by BuyLowSellHigh | 30th Aug 18, 3:05pm 1535598309

The exodus of people would've helped as well though.

by nymad | 30th Aug 18, 3:26pm 1535599612

The majority of exodus was to local areas, though.
So, as waymad points out, the correction was more likely due to an increase in the elasticity of supply of houses facilitated through relaxation of LURs.

by BuyLowSellHigh | 30th Aug 18, 4:06pm 1535601996

Population was definitely a factor. Stunning oversimplification to think supply was the one and only influence. Both population changes and housing supply had an impact.

Look at this graph of Christchurch's population. The population drop after 2010 would have had some effect, even if a small effect, on housing demand https://www.parliament.nz/resource/2686787

by nymad | 30th Aug 18, 4:07pm 1535602038

I'm not saying it didn't have an effect. I'm saying that it is nowhere near the main driver.
The main driver of house price correction was the increased supply in the greater CHC area.

Use this.
http://nzdotstat.stats.govt.nz/wbos/Index.aspx#
Look under population.
There was no drop in core working age population - ya know, the people who buy houses.

by Roger Witherspoon | 30th Aug 18, 1:45pm 1535593516

Er, but how many new Auckland residents does 1000 houses a month house? At 2500 new arrivals per month doesn't the shortfall just keep growing?

by frazz | 30th Aug 18, 1:52pm 1535593950

You forgot about the 2499 leaving per month as cant afford it and over the traffic

by unaha-closp | 30th Aug 18, 2:14pm 1535595290

It is only about 1600 a month leaving.

by frazz | 30th Aug 18, 3:05pm 1535598324

by Advisor | 30th Aug 18, 2:45pm 1535597101

There's also the internal movement of New Zealanders from the regions to Auckland - a number difficult to arrive upon but definitely worsens the city's housing shortage.

by unaha-closp | 30th Aug 18, 4:26pm 1535603169

Statistics NZ have estimated it, in 2017 32,000 internal migrants arrived in Auckland and 45,000 exited. Internal migration is making Auckland's housing shortage less of a problem every day.

https://www.stats.govt.nz/reports/internal-migration-estimates-using-li…

by unaha-closp | 30th Aug 18, 2:12pm 1535595167

A lot of spread in Auckland, where consents run about 50% up to 50% out ratio.

by BuyLowSellHigh | 30th Aug 18, 3:08pm 1535598526

Cheers Greg - Can you include REINZ stratified HPI data when next report comes out? I feel omitting it will feed the Doom and Gloomers. Looks like more apartments and townhouses are or will soon be coming online, putting downward pressure on median sale price, when this does not reflect value of existing stock, particularly stand along houses.

I'm a big supporter of high quality, high density, lower cost development - only realistic way to bring down median price I think. More affordable typologies bringing downward pressure on median price is a good thing, not a sign of housing market collapse.

by Retired-Poppy | 30th Aug 18, 3:51pm 1535601075

BLSH, what happened to your prediction that Boomers would be seeking low maintenance apartment life and support prices? You own a standalone house in Papamoa, leveraged against the same in Auckland. This more than likely means yours is hardly an unbiased and insightful forecast. It's more the wish of a spooked speculator.

If it's all getting to you, sell.

by BuyLowSellHigh | 30th Aug 18, 4:05pm 1535601944

Haven't changed my view. Some boomers will be wanting high quality apartments for sure. Lots of smaller and cheaper townhouses and apartments coming online too. No doubt this will affect median sale price. If nothing but 1 bedroom apartments are sold in NZ next month, the median sale price will drop massively, but that doesn't mean the value of stand alone houses has reduced at all. See my point?

I also maintain my view that the Papamoa sunshine would help with you chronic case of doom and gloom syndrome.

by Retired-Poppy | 30th Aug 18, 4:42pm 1535604142

Some Boomers will always want low maintenance apartment lifestyle. I think your view is shifting in light of some seriously negative news and right now, you're just covering your butt. If you've changed your view - big deal but why waste time denying it dude!. It reminds me of TTP and his ever shrinking story of a buoyant Auckland. Like TTP, you too will soon be left with just seawater. At least its value is constant ;-)

Housing from an investment (capital gains) perspective is set to seriously underperform and it seems you bought at the top. If you've not leveraged your socks off then you need not reserve space on your fridge for the latest spot values - right? Your kind (shivering speculators) are a dead giveaway.....

by BuyLowSellHigh | 30th Aug 18, 5:03pm 1535605432

I stand by every single prior comment I’ve ever made 100%.

Wondering if you’re going to backtrack on your -5% YoY in December prediction though.

by Retired-Poppy | 30th Aug 18, 5:42pm 1535607776

I've no reason to backtrack. No matter what transpires, I'll still be around to own my predictions and make some more. On the other hand, in time, you'll more than likely disappear from this forum. Your kind usually do that.

Suggest you reserve space on the fridge for your kids drawings, they'll appreciate in value.

by BuyLowSellHigh | 30th Aug 18, 5:43pm 1535607810

Looking forward to your future predictions so I’ll know what’s not going to happen.

by Retired-Poppy | 30th Aug 18, 6:19pm 1535609954

Ha-ha-ha :) what? like your quick conclusions that peace broke out on the Korean Peninsula? I still think you're very naive to think NK would willingly surrender its Nukes and not seize the opportunity to build more. You need to practice some insight, that's your problem.

by BuyLowSellHigh | 30th Aug 18, 4:06pm 1535601962

by The OverLord | 30th Aug 18, 4:31pm 1535603469

Like to see a New Starts figure versus Consents then it's real. Is there such a Stat.

by JimboJones | 30th Aug 18, 8:19pm 1535617155

Is medium density housing made of medium density fibreboard (MDF)?

by Pragmatist | 31st Aug 18, 7:07am 1535656078

Unless its also leaky... then its a soggy cardboard box.

by Dale Smith | 31st Aug 18, 8:25am 1535660753

One thing I am watching for is how the consents are used next.

There are some firms that specialize in obtaining consent and then sell the land and consents as a package onto a developer. They look to pick the best time to get consent and sell the package when the price will be highest, which normally means a shortage of consented properties. The fact certain types of consented properties are increasing could mean a rush to get these to market while the going is good.

While this sounds like good news for increased supply of properties, what it can mean is those developers, and then following end users that have bought these projects have paid top dollar just before the extra supply will cause future market prices to top.

There are also developers that get consent and develop, as well as the firms that only specialize in getting consent but either way, one of the key indicators of a consenting development market predicting trouble ahead is when you seen know developers trying to sell their consented projects onto other (more naive/the great fool/overly confident?) developers, ie they don't want to develop themselves because they see the writing on the wall.

What happens next with many of these consents will be telling.

by Chairman Moa | 31st Aug 18, 11:11am 1535670662

The yuan exchange rate is dropping = buying overseas will be more expensive = lower demands = price drop