A serious decline in the number of building consents issued for new houses in Tauranga next year has been predicted by The Lakes managing director Scott Adams.

He was reflecting on the cooling effect of banks tightening up on credit limits and the traditional time lag between subdivisions being released to the market and the issuing of titles.

Delays of up a year to issue section titles and consents in Tauranga had helped paint a picture that the market for new houses was more buoyant than sales of established properties, he said.

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Figures issued by Tauranga City Council showed consents for new house builds in July were up 50 per cent on a year earlier whereas latest real estate industry statistics showed house sales for July were down 13.4 per cent.

Mr Adams said the development lag meant Tauranga would not see a serious decrease in consents issued by the council until next year.

He had noticed a slowdown in the first four months of this year - hastened by banks tightening up on credit requirements. Since then the market had been "chugging along".

"The frenzy of 2015 and 2016 has gone ... we knew it could not continue."

Mr Adams said consents issued last month did not reflect how the market had dropped a gear. House building by investors had dried up because of the 40 per cent loan-to-value ratio introduced late last year.

The rental market was suffering at the same time because fewer young people were able to afford to buy their own home with soaring values and largely static incomes, he said.

"House prices have gone through the roof."

Section prices at The Lakes that averaged $225,000 in 2013 now averaged $300,000 while house building costs had gone up 25 per cent, driven largely by the rising costs of materials.


Harcourts managing director for the Western Bay Nigel Martin said consents issued in July were largely a reflection of when the market peaked last year.

"A lot of subdivisions were released to the market in 2016."

He said the process of getting bare land into a position so that titles could be issued was the driver for consents, and it sometimes took 12 months for titles to come through.

Harcourts settled 52 section sales at The Coast subdivision last month, although the deals were done last year.

"A lot of these building consents being applied for now were for land purchases completed last year."

Simon Anderson, the chief executive of Realty Services which operates Bayleys and Eves, said the market had settled down from the heat of the past few years.

"We are back to a normal market."

Recent patterns influencing the market included the Lions rugby tour, the wet winter and the election.

"Any time leading into an election, buyers and sellers had different behaviours because there was a bit of uncertainty."

The huge distraction of the Lions tour had also affected the willingness of people to transact sales, with fewer people going through open homes.

"If people are not seeing properties coming to the market, they don't have a goal of what they want to do."

NZ Certified Builders chief executive Grant Florence said the connection between existing and new house sales could be diverging a little.

He believed people were preferring to have a new house rather than entering the existing house market.

The additions and alterations market was particularly strong with homeowners opting to improve their house rather than shift.

Mr Florence did not expect the industry to reach the peaks of last year but construction forecasts were for demand to remain strong for new homes through to 2020-22.

He expected new house building in Tauranga to be significantly above the average of the past 10 years. Some builders did not have gaps in their workload until late 2018 and beyond.

Building consents issued in Tauranga for July
- Value of all consents: $76.8m (up 16 per cent on July 2016)
- Number of consents: 268 (up 14 per cent on July 2016)
- Value of single dwelling consents: $54.8m (up 70 per cent on July 2016)
- Number of single dwelling consents: 134 (up 50 per cent on July 2016)

Commercial consents worth over $1m issued in Tauranga and the Western Bay
- Workshop and office block Kennedy Rd, Pyes Pa West $2.2m
- Stage 2A of Tauranga Crossing shopping centre, Tauriko $1.6m
- Four villas at Summerset Retirement Village, Katikati $1.5m
- Six villas at Pacific Coast retirement village, Arataki $1.3m
- Office building at Market Place, Papamoa East $1.3m
- Stage one of coolstore, Gargan Rd, Tauriko $1.2m
- Factory and showroom, Jellicoe St, Te Puke $1.1m