Rebound in house building hits a wall, figures show

Statistics NZ says last year's consents for new homes were the lowest since the series began in 1966. Photo / Greg Bowker

House construction's rebound has taken a reverse swerve.

Statistics NZ figures yesterday showed the sector slipping into a decline after a big recovery in the past few months.

The number of housing consents issued in December was down 2.4 per cent compared with November but annually the number fell 23 per cent.

Consents were up since March but still much lower than about mid-2007.

"The trend level is now similar to the levels seen in mid-2008," Statistics NZ said. "Building consents were issued for 1260 new housing units in December. Consents were issued for 93 new apartment units.

"The value of residential building consents was $494 million, an increase of 12 per cent compared with the previous year while the value of non-residential building consents was $404 million, an increase of 5.6 per cent."

Last year, consents were issued for 14,425 new homes and apartments, the lowest since the series began in 1966.

The value of housing consents fell 18 per cent in the year to December and non-residential consents were flat, up 0.2 per cent, compared with 2008.

Goldman Sachs JBWere economist Bernard Doyle noted weak housing sales volumes and said the latest data did not paint a picture of a vibrant house-building recovery. Predictions of 18,000 new houses for the year to June now looked a bit too hopeful unless there was a sharp rise soon.

The $404 million value of non-residential consents was a respectable result. But the total floor areas of consents was still weak, down 22 per cent annually, he noted.

ASB economist Chris Tennant-Brown said the house-building recovery continued to lag behind rising housing demand.

The rise in house prices was expected to stimulate demand for more new houses but he said it appeared demand pressure was ebbing away after a period of recovering.

New Zealand could still have a shortage of new housing, he said, due to positive net migration figures.

House-building would remain depressed for a while.

"We expect core consent issuance to continue recovering into 2010, approaching the 1800/month level but remaining shy of the 2400/month level which was achieved in the peak of the building boom back in 2004," he said.

"Overall building activity should pick up over 2010, having been in retreat for much of the preceding two years as housing construction shrank.

"We expect housing construction will recover to a degree over 2010 and provide a solid boost to GDP growth."

But non-residential building was likely to be relatively flat and partially propped up by Government spending.

Warwick Quinn, chief executive of Master Builders, said the building recession was not over and any recovery was still fragile but he expected consent numbers to rise slowly throughout this year.

NEW HOUSE STARTS

2004 - 31,423
2005 - 26,023
2006 - 25,952
2007 - 25,590
2008 - 18,456
2009 - 14,425

Year to December, all dwellings including apartments
-Source: Statistics NZ.