House building: New home consents fall to levels last seen five years ago

Building consents for new homes were down 24% annually. Photo / Jason Oxenham

The number of new homes consented for building fell 24% in the year to June 2024, Stats NZ said today.

There were 33,627 new homes consented in the year to June, down from 44,529 in the year ended June 2023.

“The number of homes consented in the year ended June 2024 has fallen to levels last seen five years ago,” Stats NZ construction and property statistics manager Michael Heslop said.

In 2019, there were 34,804 new homes consented.

In the year ended June 2024, there were 14,916 stand-alone houses consented, down 19% compared with the prior year. There were 18,711 multi-unit homes consented, down 28% over the same period.

Of the multi-unit homes consented there were 15,170 townhouses, flats, and units (down 19%), 1942 apartments (down 52%) and 1599 retirement village units (down 51%).

“The number of both apartments and retirement village units consented in the year ended June 2024 is the lowest in the last nine years,” Heslop said.

Westpac senior economist Satish Ranchhod said the downtrend in residential construction reflects tough financial conditions in the building sector.

“In addition to the large build cost increases in recent years, we still have high interest rates. At the same time, house sales remain muted and house price growth has stalled,” he said. “Against that backdrop, prospective buyers are sitting on the sidelines and developers are reluctant to bring new projects to market.”

Ranchhod said the downturn in construction activity has been more moderate than the fall in consent issuance.

“That’s because many firms have been working through existing pipelines of work. However, with consent issuance continuing to trend down, building activity is likely to continue softening well into the New Year.”

Meanwhile, on a monthly basis, new home consents in June (2178) fell 14% in seasonally adjusted terms when compared with May 2024 and were 36% lower compared to June 2023.

“The lower number of working days in June 2024 contributed to the decrease in the number of homes consented in the month,” Heslop said.

Stats NZ said there were 18 working days in June 2024, compared with 21 in June 2023. This was due to Matariki falling in June this year. Fewer working days in a month means less time for building consent authorities to issue consents for new homes.

All regions consented fewer new homes in the year ended June 2024.

In Auckland, there were 13,855 homes consented (down 27%). Canterbury, with 6,618 homes consented, was down 16%, Waikato with 3,033 was down 29% and Wellington with 2,133 was down 36%.

“While all regions experienced a decrease in the number of homes consented, some of the territorial authorities within those regions had a larger decrease than others,” Heslop said.

Wellington city experienced one of the largest falls in the 12 months to June, with consents down 69% from 1157 to 353.

“Wellington city has seen a significant drop in the number of new homes consented, largely driven by a decrease in apartments,” Heslop said.