“In addition to the large build cost increases in recent years, interest rates remain high. At the same time, house sales remain muted and house price growth has stalled.”
Gordon added that prospective buyers are sitting on the sidelines and developers are reluctant to bring new projects to market.
“While interest rates have now started heading lower, we expect it will take some time before that flows through into additional building activity,” he said.
Building and Construction Minister Chris Penk said the annual figures reinforced that it was too hard and too expensive to build in New Zealand.
“The data tells a worrying story about the state of the sector,” Penk said.
“The long-term data is sobering, with only 6.4 dwellings consented per 1000 residents, which is less than half the number of dwellings consented in 1973 (13.4 dwellings were consented per 1000 residents in 1973).
“This tells us that building rates are failing to keep pace with population growth and that we need to be much more ambitious.”
In the 12 months to July 2024, there were 18,503 multi-unit homes – which includes townhouses, apartments, retirement village units and flats – and 15,418 stand-alone houses consented, down 28% and 14% respectively when compared with the year ended July 2023.
On a monthly basis, there were 3352 new homes consented in July, up 9.6% compared with July 2023.
“A higher number of working days contributed to the increase in homes consented in July 2024 when compared with July 2023,” Stats NZ’s construction and property statistics manager Michael Heslop said.
When seasonal effects are excluded, the number of new homes consented in July 2024 rose 26% compared with June 2024. This follows a seasonally adjusted fall of 17% in June.
Stats NZ said the number of homes consented each month could vary significantly due to the timing of large projects.
Gordon said residential building consents rebounded even more than had been expected in July.
“The consent figures reinforce our growing sense that a range of economic indicators were affected by the Matariki public holiday (this year it was at the end of June, last year it was mid-July).
“While it only meant one fewer working day for the month, it appears to have displaced a lot of activity around it – i.e. people taking holidays or avoiding making plans over a four-day work week.”
Cameron Smith is an Auckland-based journalist with the Herald business team. He joined the Herald in 2015 and has covered business and sports. He reports on topics including retail, small business, the workplace and macroeconomics.
