Building consents for small dwellings hit a milestone

Wednesday, 30 September 2020

Consents for townhouses and flats are at its highest level since the early 1990s.

The number of small dwellings has hit their highest level since the early 1990s, according to new building consent figures.

Statistics New Zealand said 10,063 townhouses, flats, and units were consented in the year to August, the first time an August year had gone over 10,000 since records began.

However, Infometrics said things were not so rosy for apartments, which had gone into freefall in Auckland as international student numbers fell, more people worked remotely and lending for high rises dried up.

Townhouses had been construction's ‘’saving grace,’’ particularly in Auckland, Waikato, and Wellington, Infometrics economist Brad Olsen said.

* Building consents remain high after bouncing back from lockdown slump

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Infometrics says townhouses have been a ‘’saving grace,’’ given the freefall in apartment consents.

‘’The mix of housing continues to shift, with medium-density townhouses becoming a larger share of building activity at the expense of standalone dwellings, thanks to planning changes in recent years that have accelerated a modal shift.’’

Retirement dwelling consents were also on pause, undoing much of their post-lockdown surge in June, he said.

Statistics NZ said that total housing consents were holding their own. For the month of August, the number of consents was up just 0.3 per cent compared to the previous month, which was down 4.6 per cent.

Acting construction indicators manager Dave Adair said building consents had been quite stable in the last three months, after the gyrations of the March to May lockdown.

“The strong consent numbers for new homes in recent months means that there is a relatively large amount of residential building work planned for the future.”

So far this year, building consents have been running at a very healthy 37,467, up 5.1 per cent on the previous year.

Non-residential work has been less fortunate, down 9.4 per cent to $6.8 billion in the year to August.

Economists showed considerable wariness over the new figures. Infometrics said standalone housing consents in August had declined in all regions except Gisborne, Hawke’s Bay, and Taranaki.

And ASB economist Jane Turner said that while building plans were back to pre-Covid levels, she was not expecting it to last.

''We expect new house building demand to hold up over 2020, supported by strong house market activity, record low mortgage interest rates and chronic housing shortages across New Zealand.

‘’However, we do expect house building demand to start to ease over 2021 as housing supply catches up with demand, and soft population growth reduces future house building requirements.’’

Two factors in housing’s favour were the fact that the rise in unemployment was likely to be less than initially feared, and further declines in interest rates were likely.

‘’Nonetheless, over the medium-term, we do expect housing construction activity to fall.’’

Building consents signal an intention to build, but the actual measure of work completed lies in the quarterly ‘’value of building work put in place’' data.

Statistics New Zealand says that many projects are expected to have had their completion dates pushed back by Covid-19 and the lockdown in March.

In the June quarter, the total volume of building work ‘’put in place’’ was down 22 per cent, compared with 5.4 per cent during the March quarter.

Non-residential building fell the most, down 27 per cent, while residential work fell 19 per cent.