Auckland consents at 2nd highest ever

New dwelling consents were down by a seasonally adjusted 10% in July 2018, following an 8.2% fall in June, according to the latest Stats NZ data.

However, on an annual basis, 32,850 new homes were consented in the year ending July 2018 – up 8.0% from the July 2017 year.

Stats NZ construction indicators manager Melissa McKenzie says the number of new homes consented can be quite volatile on a monthly basis.

That’s largely because the number of apartments consented tends to fluctuate a lot.

“Looking at the longer-term picture, we are seeing growth in building consents for apartments and townhouses, while consents for stand-alone houses have been quite flat over the past two years.”

Auckland accounted for 39% of all new consents nationally over the year to July 2018, with 12,845 dwelling consented.

Not only is that an increase of 28% from the July 2017 year, but McKenzie says it’s the second-highest annual total since records began nearly 30 years ago

“The highest on record is 12,937 new dwellings in the June 2004 year.”

She adds that an all-time record (3,032) number of townhouses, flats, and units were consented in the year ending July 2018 and that contributed to near-record number of new consents in Auckland.

For ASB senior economist Jane Turner, the extent of the national decline in the past two months suggests the trend in dwelling consents is flat as opposed to gradually increasing.

“Auckland residential building demand held up well, with consents increasing slightly on the previous month and apartment consents solid.”

Apartment consent volatility contributed to a fall in Wellington consents, but the region remains undersupplied, she says.

“We expect pent-up demand from recent strong population growth will continue to support high levels of residential building activity.”

However, in some other regions – including Canterbury, the Waikato, Bay of Plenty and Taranaki - it appears that house building activity has peaked, Turner says.

“We expect some regional divergence to continue over the next year and on a nationwide level house building activity is likely close to a peak.”

It is Auckland that is struggling with the biggest supply shortage though and that means the strength in the region’s consent issuance is good news.

Westpac senior economist Satish Ranchhod says Auckland consents being up a massive 28% equates to close to 13,000 new dwellings consented.

That figure includes a large increase in medium-density homes, which will be important for addressing the region’s housing shortage over the coming years, he says.

“The firmness in Auckland consents comes on top of signs that population growth is slowing (albeit from high levels).

“If the sort of pace we’ve seen in recent months is sustained, Auckland will soon be consenting enough homes to start eating into its large housing shortage, though the region will still need around a decade of rapid home building.”

While home building activity will remain elevated for an extended period, construction industry capacity constraints might put a brake on how fast activity can ramp up to meet demand, Ranchhod adds.