Property editor of the NZ Herald

House building figures hit new low

Helen O'Sullivan says a shortage of houses is one of the real estate industry's main problems.
Photo / Steven McNicholl
Helen O'Sullivan says a shortage of houses is one of the real estate industry's main problems. Photo / Steven McNicholl

House building in New Zealand has slumped to a new record low.

Statistics NZ said consents for just 13,533 new houses were issued in the year to September 2011, down from 16,292 consents issued in the year to September 2010.

Louise Holmes-Oliver of Statistics NZ said yesterday the big drop in seasonally adjusted figures for new home approvals in September partly reflected the strength of the increases in the previous two months.

Darren Gibbs of Deutsche Bank noted the extremely soft numbers and predicted Christchurch could help eventually.

"Following two months of solid improvement the number of dwelling consents issued fell sharply in September. Together with another soft reading in the non-residential sector, the near-term outlook for the construction sector appears likely to remain depressed despite widespread expectations that earthquake-related repairs in Canterbury will help boost the industry sharply from next year," he said.

Philip Borkin of Goldman Sachs & Partners NZ said the data was inherently volatile and the underlying trend was still rising, albeit at a more gradual pace.

Non-residential consent issuance was valued at $320 million in the month, broadly in line with the past 24-month average.

Statistics NZ said earthquake-related building consents were issued in Canterbury worth $29 million in September of which $26 million was for non-residential consents. Overall, residential consent values totalled $398 million in September, down 12 per cent compared with the same month last year, while non-residential consents totalled $320 million, down 13 per cent. Helen O'Sullivan, chief executive of the Real Estate Institute, said the number of new-house builds had reached critical lows and was a factor stopping people from listing their older houses.

Real Estate Institute warns buyers against unlicensed inspectors

The Real Estate Institute is warning against low-quality pre-purchase building reports and told consumers only to use inspectors who are members of two professional industry bodies.

Helen O'Sullivan, REINZ chief executive, said members of the Institute of Building Surveyors and the Royal Institution of Chartered Surveyors were qualified to do the work.

People should not buy a house without a professional written report, she said. Agents cannot recommend any provider in particular, but membership of the two bodies indicated inspectors were properly qualified and held professional indemnity insurance, she said.

A desperate shortage of houses for sale and poor inspection reports were two of the biggest problems dogging the real estate sector, she said.

The critical shortage of houses meant some people were being forced to buy before they sold, she said. The shortage was caused by the construction downturn and general economic uncertainty which meant people were reluctant to list their house for sale or move.

From around 2004 when about 11,000 houses sold monthly to now when only about 5500 places are selling, buyers were left with little stock to chose from, she said. The sector turns over real estate worth about $23 billion a year with about 66,000 residential properties selling for a median $350,000.

From about 22,000 agents at the peak of last decade's boom, only about 13,000 were licensed now, of whom about 10,500 were working.

The institute has rebranded and had a new focus, after the new act came in and the Real Estate Agents Authority and Real Estate Agents Disciplinary Tribunal were created, removing all the institute's disciplinary work.

O'Sullivan, who started last November, is a chartered accountant formerly of Korda Mentha and Crockers and said unregulated property managers were another huge problem for the sector. The recent failures of Wellington's Jericho Residential Property Management and Auckland's Trump Assets Management and City Gardens Management were of great concern to the industry, she said.

The institute wants managers to be regulated but the law change removed that, O'Sullivan said, as well as exposing vendors to a double commission nightmare where they might have to pay once to a selling agent and again to a listing agent.

- NZ Herald

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