Consents for new homes have dropped 20 per cent in the last year. Photo / Jason Oxenham
Consents for new homes have dropped 20 per cent in the last year. Photo / Jason Oxenham
An economist says the economic issues in the country’s building sector are deepening as the number of consents being issued to build new houses continues to decline.
Stats NZ data released today show there were 40,408 new homes consented in the year to September 2023, 20 per cent fewer thanthe year prior.
Annual home consents peaked in 2022 at 51,015 and have been declining ever since.
Consents also declined on a monthly basis with 5 per cent fewer consents issued in September than August 2023.
“The downturn in New Zealand’s building sector is deepening and we expect a sharp decline in building activity over the year ahead,” Westpac’s Satish Ranchhod said.
In recent years, there have been large increases in building costs, a sharp fall in house prices and continued increases in interest rates, Ranchhod said.
“Against that backdrop, developers have been reluctant to bring new projects to market, and prospective buyers have been nervous about making purchases.”
Annual declines in building consents are widespread, with every region except Marlborough issuing fewer consents in the 12 months to September than the year before.
There were large falls in Auckland (down 22 per cent), Waikato (down 21 per cent), Wellington (down 18 per cent) and Canterbury (down 17 per cent).
Satish Ranchhod, senior economist at Westpac Bank. Photo / NZME
Ranchhod predicts sharp falls in residential building activity over the next year, although the extent of the decline would be moderated to a degree by the fact that over the past year, large numbers of projects were consented.
“Staff and materials shortages delayed how quickly work could be completed. Even so, a period of weak building activity is ahead of us, and some planned work will likely be cancelled.”
Most of the consents issued over the past year were for townhouses, flats or units (17,874 - down 14 per cent compared with the year ended September 2022). There were 3227 consents for apartments (down 26 per cent) and 2688 consents for retirement-village units (down 6.8 per cent) issued.
Ranchhod said there were also fewer commercial projects coming to market and the amount of non-residential floor space being consented was down 13 per cent over the past year.
“Developers have highlighted softening economic activity and higher financing costs as key factors that are putting the brakes on new projects.”
Julia Gabel is an Auckland-based reporter with a focus on data journalism. She joined the Herald in 2020.
