Consent figures show Auckland new house building booming

Friday, 30 November 2018

A timelapse sequence shows how a prefab house is built.

Consents were issued for more than 13,000 new homes in Auckland in the year to October – the first time that number had been reached since the 1970s, Stats NZ said.

Home permits in Auckland briefly reached a similar high level in the early 1970s, when Auckland's population was less than half what it is now,' acting construction statistics manager Dave Adair said.

'The number of new homes consented also came close to 13,000 in the June 2004 year.'

Over the past year, only 48 per cent of consented new homes in Auckland were stand-alone houses (74 per cent across the rest of New Zealand). The remaining 52 per cent were apartments, townhouses, retirement village units, and flats.

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Gareth Kiernan said he did not think the rate could be sustained.

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Infometrics economist Gareth Kiernan said it was good news that consent numbers were growing after a soft patch in 2017.

'However, capacity constraints remain an issue in the construction sector in Auckland, even if they have become less critical in the residential subsector over the last year and become more problematic in the non-residential subsector.

'Although we expect further growth in Auckland consent numbers during 2019, we don't think consent numbers of over 13,000 can be sustained, and expect activity to pull back to around 12,000 consents per annum during 2020. This outlook is obviously problematic given the massive undersupply of housing in Auckland.'

Cameron Bagrie, of Bagrie Economics, agreed there was no quick fix. 'It took 20 years to get into this pickle in housing in Auckland and it will take another 20 to get out the other side.

He said KiwiBuild looked likely to take a 'hellishly long time' to get up and running in a way that would make a dent in the city's supply problem.

'It's not as bad as it was but we're still struggling to keep up. We've still got phenomenal migration numbers and population growth and the lion's share of that is going into Auckland. It's heading in the right direction, the demand side is starting to peel back but there's still a mis-match.'

In the year ended October 2018, consents were issued for a total of 32,925 new homes in New Zealand – up 6.7 per cent from the October 2017 year. Auckland was the main driver of this increase, followed by Wellington. The picture was mixed for other parts of the country, with the largest annual declines being in Canterbury and Bay of Plenty.

Nationally, the number of new homes consented rose 1.5 per cent (seasonally adjusted) in October 2018, reversing a 1.3 per cent fall in September.

ASB economist Jane Turner said the housing shortage seen in Auckland had also spread to Wellington.

'Growth in housing construction has also struggled to keep up with population growth in other regions, including Gisborne and the Hawkes Bay. Nonetheless, population growth on a nationwide basis is now slowing and, as a result, we believe the level of nationwide housing construction is close to a peak. We expect house building activity to remain at relatively high levels over the coming years in order for housing supply to catch up to housing demand.'