On the cusp of a big downturn for residential builders

Building consents have plunged 29% in the year to February, Stats NZ figures show.

There were 2,972 new homes consented last month, the fifth month in a row the number of new homes consented has been below the same month of the previous year.

“The drop in the number of homes consented last month is big when compared with February last year which had the highest number of homes consented for any February month on record,” Michael Heslop, NZ Stats construction and property statistics manager says.

On a yearly basis the number of new consents reached 48,257, down 3.3% compared to the previous 12 months.

While the decline was small, it is the first time on an annual basis they have dropped since 2012. Over that time consents have spiralled up 342% creating a massive building boom. 

However, the number of consents for new homes issued last month is at a similar level to what it was in 2021, says Heslop.

“The number of new homes consented has been declining since the peak in early 2022,” Heslop says.

In seasonally adjusted terms, the number of new homes consented last month fell 9% compared with January. This follows a seasonally adjusted fall of 5.2% in January 2023.

Regions drop

All regions except Bay of Plenty and Marlborough consented fewer new homes when compared with February last year.

“Cyclone Gabrielle may have caused some disruption to consent issuance in affected regions in February,” Heslop says.

“However, the monthly fall in homes consented was seen across nearly all regions, including those not directly affected by the cyclone.”

The numbers of new homes consented in regions that contributed most to the overall monthly drop were:

• 128 in Otago, down 47% compared with February 2022);
• 517 in Canterbury, down 46%;
• 202 in Wellington, down 35%; and
• 1,289 in Auckland, down 21%.

The numbers of new homes consented in February in other regions affected by adverse weather events were:

• 108 in Northland, down from 144 in February last year;
• 297 in Waikato, down from 349;
• 6 in Gisborne, down from 15; and
• 46 in Hawke’s Bay, down from 53.

The adverse weather events earlier this year may impact home consenting numbers in affected regions in the coming months. Some emergency repairs do not require a building consent and will therefore not be included in future building consent issued data, says Heslop.

Types of consents

There were 27,872 multi-unit homes (townhouses, apartments, retirement village units, and flats) consented in the year ended last month, up 15% compared with the previous. year.

The number of stand-alone houses fell 20% to 20,385 over the same period.