Consents for new homes are stabilizing, but the construction pipeline is strong

Consents for new homes have stabilized, but at near record highs, and that should support strong housing construction for next year, experts say.

There were 50,653 new homes granted in the year to August, up 8.9% from the same period last year, according to the latest figures from Stats NZ.

But that figure was well down in May, when a record 51,015 consents were issued.

On a seasonally adjusted basis, consents have been volatile recently. They fell 1.6% in August, after rising 5% in July and falling 2.2% in June.

READ MORE:
* Building permits for single-family homes drop by 25%
* Construction industry grappling with rapidly rising costs
* Consents recorded at home highlight the evolution of housing

Michael Heslop, head of building and property statistics at Stats NZ, said consents remained at high levels in most areas, particularly Canterbury which hit a new annual high.

There were 8,691 consents issued in Canterbury, in the year to August, an increase of 23% on the same period last year.

That meant consents in the area were now well above the post-quake reconstruction peak of 7,308 in the year ending December 2014, he said.

Northland and Southland also hit new annual highs with 1,549 and 485 respectively, while consents in Wellington rose 18% to 3,875. Auckland recorded the highest number of consents with 21,463, up 7.7% compared to last year.

The number of new residence permits issued remains at high levels in most regions.

MARTIN DE RUYTER/Stuff

The number of new residence permits issued remains at high levels in most regions.

Heslop said the annual increase was due to multi-unit homes, which included townhouses, apartments, retirement village units and apartments, and the number of consents could fluctuate from month to month. other due to large multi-unit projects.

But Westpac’s senior economist, Satish Ranchhod, said while issuance of annual consents remained high, consents on a monthly basis had been tracking aside for about a year.

“There was some month-to-month volatility associated with ‘lumpy’ categories like retirement villages, but consents did not increase significantly above 4,200 per month for a period. extended.”

The construction sector was facing challenges including falling house prices, rising interest rates and construction costs, labor shortages and buyer hesitation, he said. he declared.

“The resulting pressure on margins is probably one of the main reasons for the low level of confidence in the construction sector.”

In the latest ANZ Business Outlook Survey, residential construction intentions fell to a new all-time low of minus 76.5 in September, from minus 65.0 in August.

Ranchhod expected that the tougher financial conditions would lead to a downward trend in consents, but that the slowdown in actual construction would be gradual as construction activity had not kept pace with the increase in consents. consents.

“There is still a big pipeline of planned projects. And although the possibility of significant increases in construction activity seems limited, the level of construction activity should remain firm in the new year.

There has been an increase in consents for multi-unit homes, such as apartments and townhouses.

Jonathan Killick / Stuff

There has been an increase in consents for multi-unit homes, such as apartments and townhouses.

A new report from global construction consultancy Rider Levett Bucknall has confirmed that the outlook for the sector is uncertain, with cost pressures making companies more cautious about investing.

It also showed that despite challenges on the supply side, construction demand had been strong, while consent levels indicated a strong and continued pipeline of residential work over the coming year.

Rider Levett Bucknall director Grant Watkins said the demand was driven by the continued scaling up of housing, with increased issuance of consents for medium-density housing.

Rising population density would continue to drive housing intensification, but beyond the pipeline for the year ahead there were signs of slowing demand, he said.

“Builders are reporting a drop in inquiries, suggesting a slowdown in residential construction later in 2023, and higher interest rates and tighter access to finance are expected to weigh on construction demand.”

But with the easing of international border restrictions, population growth due to a gradual recovery in net migration flows was expected from next year, Watkins said.

“This will support underlying demand for longer-term non-residential construction and infrastructure.”

Public spending on transport as well as social housing, education, community amenities and health infrastructure would also support growth in infrastructure construction, he said.

About Keith Tatum

Check Also

Biden’s climate goals could survive this election

Voters line up to vote in Fort Worth, Texas. | Ron Jenkins/Getty Images President Joe …