Housing consents hit highest level since 1974

Tuesday, 14 January 2020

Consents for new housing are now at their highest level since 1974.

Housing consents have hit a 45-year high, a fact that one economist says will likely support higher house prices next year.

Statistics NZ data shows a total of 37,010 residential consents were issued in the year to November, the first time they have breached the 37,000 mark since the mid-1970s.

The record still stands at 40,025 consents in the year to February 1974, when the population was also much lower.

Statistics NZ said the trend had been rising since late 2011, when consents dipped to below 14,000 annually.

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Consents are now up 13 per cent on the previous year and 60 per cent above historical averages.

In housing-short Auckland, consents reached 14,866, up 16 per cent.

ASB senior economist Mark Smith said the pick-up in consents was broadly based. Only three of the 16 regions (Northland, Marlborough and Nelson) saw consents running below historical averages and issuance was close to double the average in Auckland and Otago.

All eyes will now be on whether building costs continue to rise.

It was nearly two-thirds above historical averages in the Waikato, Wellington and Manawatu.

'We expect solid population growth, low mortgage rates and the strengthening market for existing dwellings to support building demand over the year ahead, and will be closely monitoring building costs for signs of pricing and resourcing pressures.'

As a result, he expected house prices to pick up over the year ahead.

'Higher house prices typically boost demand for new builds and we expect dwelling construction to remain elevated at high levels over the year ahead.'

However, that could also lift construction costs, already up 7.7 per cent year on year, 'which could dampen future construction activity'.

'The fall in pricing intentions for the building sector signalled by today's Quarterly Survey of Business Opinion (QSBO) is especially welcome.'

Non-residential construction activity was also likely to remain strong, with consents up across most sectors.