In the new data out today, Auckland received 21,743 new dwellings consented in the year to July, up 13 per cent, Waikato 5021 up 4.7 per cent, Wellington 3927, up 20 per cent, the rest of the North Island 7077 down 4.2 per cent, Canterbury had 8556 up 26 per cent and the rest of the South Island 4289 up 15 per cent.
In July, 4100 new dwelling consents were approved: 1853 for townhouses, flats, and units; 1730 for stand-alone houses, 320 retirement village units and 197 for apartments.
Non-residential building consents totalled $9 billion in the July year, up 14 per cent annually. The non-residential building types with the highest values were education buildings at $1.5b, storage buildings at $1.4b and offices, administration and public transport buildings at $1.4b.
Satish Ranchhod, Westpac economist, is less swayed by the slight rise: "looking under the surface, consents have been flattening off. We expect that building activity will remain strong for some time yet but a slowdown in coming," he said this morning.
"Consent issuance was slightly stronger than we had anticipated in July. However, the source of that upside surprise was the large number of retirement units that were issued over the past month - 320 new retirement units were consented, well above the typical level of around 190 per month. These consents tend to be issued in lumps, and don't really tell us about the broader trend in home building," Ranchhod noted.
Taking a look at consents for buildings excluding retirement units gives a clearer picture of what's happening to the building pipeline. Consents excluding retirement units have effectively been tracking sideways for a year now at very high levels. There are some signs that numbers are starting to edge back, but only very slightly, he said.
"Underlying the ongoing firmness in consent numbers, we are seeing a continued shift from stand-alone houses to medium density dwellings, like apartments and townhouses. That shift has been particularly stark in Auckland where housing density is particularly tight. In fact, stand alone houses now only account for around 20 per cent of new consents in our largest city, down from around 50 per cent last decade," Ranchhod wrote today.
The big question was how long consents and construction activity will remain elevated.
"In terms of consents, we do expect to see issuance trending down over the coming year in response to changing financial conditions," Ranchhod said.
Build costs had risen sharply over the past year, interest rates are on the rise and house prices are continuing to fall. Against this backdrop, developers are increasingly hesitant about bringing new projects to market and buyers are reluctant to make purchases. Those factors are being reinforced by the downturn in population growth in the wake of the pandemic, he said.
While consent issuance was set to trend down during the coming year, the slowdown in actual construction is set to be more moderate.
"There is a large pipeline of building work planned. In fact, consent issuance has risen much more strongly than actual building activity, with earlier shortages of materials and ongoing shortages of labour continuing to constrain the pace of building. Those conditions mean that, while the scope for further significant increases in building activity are looking limited, the level of construction activity is likely to remain firm into the new year," he said.
Michael Heslop, construction and property statistics manager, has cited apartment numbers in particular for driving up activity levels. For example, there were 25,475 multi-unit homes consented in the year to March, up 40 per cent annually, he said.
This year's Construction Industry Confidence Report showed 59 per cent of builders and 46 per cent of architects predicted the sector to deteriorate.
Those numbers were almost double figures from two years ago.
The EBOSS survey of 1100 builders and architects found 91 per cent of builders cannot get the staff to meet order book work.
Around 45 per cent of those surveyed were running at full capacity to get current builds completed.
And 77 per cent of architects and designers say they cannot find enough qualified staff to meet demand.
