Auckland housing consents surge, but will it last?

Friday, 29 June 2018

A surge in consents for homes in Auckland has got the city to the level where it needs to be to address its housing shortage – but it's unclear whether the trend will last.

Statistics NZ has reported that 1530 new homes were consented for in May in Auckland, the highest number since October 2002.

'Auckland consented more new homes in May 2018 than in any other month in over 15 years,' construction statistics manager Melissa McKenzie said.

'Almost half the new homes were stand-alone houses, with apartments and townhouses driving growth in recent months.'

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In Auckland, 710 new stand-alone houses, 419 apartments, 258 townhouses, flats, and units, and 143 retirement village units were consented in May 2018.

Nationally, in the year ended May 2018, 32,628 new homes were consented – up 6.5 per cent from the May 2017 year. In Auckland, 12,274 new homes were consented – up 18 per cent from the year ended May 2017.

Satish Ranchhod, a senior economist at Westpac, said it was an encouraging sign. 'If we look at the annual total of consents, it's at the sort of level we need to see to begin eating into the very large shortage of homes we have in Auckland. It's also been underpinned by a pick-up in smaller, medium-density homes which is important for housing affordability.'

But he said the construction industry had challenges to tackle if that trend was to continue, finding enough staff and dealing with rising costs and problems accessing finance – just as the housing market was cooling.

That could mean that building activity would increase a lot more gradually than the pick-up reported for May would indicate, he said.

'There is a need for a large amount of building in Auckland.'

Apartments consents tended to be 'lumpy' with a lot coming on at once, he said, which could create inconsistencies.

ASB economist Jane Turner agreed that capacity constraints could hold back growth, despite demand.

She said outside Auckland, consent issuance trends were muted. 'Wellington building demand growth has slowed, after a rapid pick up over recent years. Wellington, like Auckland, has seen a shortage of housing emerge (albeit to a much lesser extent) as population growth has outstripped house building. That shortage of housing will underpin Wellington housing building demand over the year ahead.'