New building consents take a tumble

In May this year, there were 3175 new dwellings consented.

New dwelling consents are down, but the pace of the slowdown seems to be slowing.

Stats NZ said the seasonally adjusted number of new dwellings consented in May fell 1.7%, after falling 2.1% in April.

But in the year to May 31, the actual number of new dwellings consented was 34,851, down 23% from the year before.

And in the year to May 31, the number of new dwellings consented per 1000 residents was 6.6, compared with 8.7 a year earlier.

In May this year, there were 3175 new dwellings consented.

Those numbers included 1555 stand-alone houses, 1424 townhouses, flats, and units, 109 apartments, and 87 retirement village units.

Stats NZ said the number of dwellings consented each month could vary significantly due to the timing of large multi-dwelling projects, such as townhouses and apartment buildings.

“While residential consent issuance nudged down again in May, consent issuance looks like it’s finding a base,” Westpac senior economist Satish Ranchhod said.

He expected construction activity to remain weak over the year ahead.

“Today’s fall follows the sharp downturn over the past year, with consent issuance in the 12 months to May 23% lower than it was in the previous year,” Ranchhod said in a note after the data release.

“As we’ve highlighted previously, that’s a result of tougher conditions in New Zealand’s building sector.

“That includes large increases in build costs and financing costs over the past few years, as well as continued softness in the housing market which is weighing on the prices for newly built homes.”

He said it was encouraging to see the downturn in consent issuance looked like it was finding a base.

“Consents for standalone houses (around 40% of the total) have held around current levels for more than six months now.”

Ranchhod said a downturn in the multi-unit space, including townhouses and other medium-density developments, had also flattened off.

“However, with interest rates set to remain at contractionary levels for some time yet, any recovery in the housing market or consent issuance is a long way off.”

New dwellings consented in the year to May 31 amounted to 14,488 in Auckland, down 26%.

The new dwelling consent numbers were down 25% in Waikato and 36% in Wellington.

The decline was less severe in the rest of the North Island, down 18% year-on-year.

In the South Island, new dwellings consents were down 15% in Canterbury and 17% elsewhere.

The Stats NZ data arrived soon after an Infometrics forecaster said house prices must fall at least another 16% to become anything like affordable.

According to the Real Estate Institute, prices were 15.9% below their 2021 peak.

Stats NZ said the annual value of non-residential building work consented was $9.2b, down 7% from the year before.