Tag Archives | building consents

Home consents resume upward trend, standalone share falls

Consents for new homes resumed their upward trend in May after a dip in April, but the rise still looks tentative against the upward lines in immigration & overall population growth.

Statistics NZ reports population growth with a calendar that rises continuously, but its monthly building consent figures appear only at the end of the following month.

The population has risen in the last 12 months from an estimated 4.69 million (97,300 total growth in the 12 months to June 2016, then another 106,000) to 4.796 million now.

At an average 2.7 residents/household, those population increases would have required housing increases of 36,000 homes built in the year to June 2016, and 39,300 built in the last 12 months (ignoring demolition or falling into disuse).

Consents for new homes fall well short of those requirements for actual construction, which means the housing “crisis” which has afflicted New Zealand is either not really a crisis, or politicians, bankers & builders don’t want to supply the solutions that would shrink the ever-widening gap.

Labour has proposed building 10,000 homes/year to start closing the gap. National has used housing accords with local councils to try to lift consent figures while at the same reducing construction conditions for those more quickly consented builds (but which have been slow to get underway) – as the country’s leaky building saga constantly warns that building standards need to rise, not fall.

For any politician to earn my vote, I would expect not just encouraging words but a plan to be laid out well before the 23 September election for fairly precise increases in home construction in various parts of the country, accompanied by financing plans which would require banking sector support for cheaper homes and government programmes to help finance cheaper homes.

And more: I would expect plans for job growth accompanying the construction of new homes – not just in new shops but a wider range of employment that would begin the task of dismantling the Auckland of one-way traffic congestion, and the New Zealand centred purely on Auckland.

Migration is an obvious issue in the housing picture. The net inflow has been boosted by the number of Kiwis returning from Australia, and that seems unlikely to be reversed in the near future as Australia’s federal government continues to stumble and job growth across the Tasman remains illusory.

The net inflow of migrants for the 12 months to May fell just short of 72,000, requiring 26,650 new homes to be built at that 2.7 residents/household average.

Building consents for new homes over those 12 months totalled 30,645, up 8% on the previous year’s 28,387, leaving 4000 consents (and mostly not yet built homes) for internal population growth of 34,000.

It’s plain that these numbers don’t stack up, which means prices will continue to rise while no political solution is evident. Added to that picture, the state of Australia’s major banks has brought warnings to tighten from international banking actors such as the International Monetary Fund, and tightening in Australia means tightening in New Zealand.

In Auckland, the one bright spot in this gloomy economic & financial morass is that the new unitary plan allows intensification over a wide spread of suburbia. Many landowners are now taking sections (or sections with an old house which most likely would be demolished) to market with consent – or ability under the plan – to build perhaps 4 units where one house previously stood.

There is a fear that this will change neighbourhoods – and it will, but not automatically badly. I write this article from a hotel room in Denver, Colorado (on a family visit, off out into the boiling sun today), and beside this pocket of city-fringe hotels there is a steady rise in both apartment living and in replacement of old homes with houses on smaller sections and with terraces & townhouses.

This city, too, believes it has a housing crisis and, like Auckland, is thinking about solutions but doing too little. It’s a city that has apartments right in the centre and many lowrise apartment blocks spread through business areas. New developments in the inner fringes are mostly lowrise – up to 6 storeys (think Britomart’s old buildings to gauge the human scale these changes are being made at). Home sizes? I’m not sure yet.

In Denver, much of the new has charm. New Zealand, and Auckland in particular, has operated on the “build to the max” mantra for decades, and charm is the first thing tossed out the window.

Building to the max (which means pricing to the max) generally rules out Auckland being a charming if over-populated city, but Auckland can develop apace, with more thought about the consequences, and become a pleasant but more populated city.

The consent picture

Standalone homes’ share of the new residential market has been falling gradually, and depending on applications for lumpy intensive construction projects for apartments, retirement villages & suburban townhouses.

In May, standalones represented 73% of the month’s consents, up from 70.6% in April but down from 77.6% in May last year. Over a year, the standalone share fell from 72.1% in the 12 months to May 2016, to 69.4% in the latest 12 months.

The national consent numbers for May and the year to May, compared to May last year, and the latest 12 months compared to the previous 12 months:

Total consents for new homes: 2794 (up 10.9% from 2520), 30,645 (up 8% from 28,387)
Total values for new homes: $1.229 billion (up 14.1% from $1.078 billion); $12.81 billion (up 12% from $11.439 billion)
Standalone homes: 2039 (up 4.2% from 1956); 21,262 (up 3.9% from 20,467)
Apartments: 123 (up 6% from 116); 2881 (up 37.5% from 2095)
Retirement village units: 137 (up 13.2% from 121); 1718 (down 17.2% from 2076)
Suburban townhouses & flats: 495 (up 51.4% from 327); 4784 (up 27.6% from 3749)
Standalone share of consents: 73% for the month (70.6%, 77.6%); 69.4% (72.1%).

Auckland residential consents up 20.9% for month

Consents for new homes in the Auckland region rose 20.9% this May compared to last May, and by 11.1% for the year. Consents for the month rose in 9 wards and fell 4 eastern & southern wards.

Auckland residential consents, month & year compared to that month last year and the previous 12 months:

Region: 885 (732), 10,379 (9434)
Rodney: 159 (76), 965 (945)
Albany: 208 (167), 2549 (2322)
North Shore: 42 (15), 521 (484)
Waitakere:  53 (44), 626 (515)
Waitemata & Gulf: 9 (20), 1093 (852)
Whau: 13 (17), 339 (195)
Albert-Eden-Roskill: 94 (37), 731 (467)
Orakei: 5 (8), 280 (356)
Maungakiekie-Tamaki: 83 (32), 468 (480)
Howick: 33 (84), 401 (658)
Manukau: 33 (30), 397 (498)
Manurewa-Papakura: 65 (106), 1065 (900)
Franklin: 88 (96), 944 (762)

Overall figures

Consents for all new residential construction, including additions & alterations at $1.9 billion, were up 12% for the year to $12.81 billion ($11.439 billion). For the month, residential consents were up 14.1% to $1.229 billion ($1.078 billion).

Across all sectors, consents for the May year were $10 billion up on the level in the May 2012 year at $19.726 billion, and up just under $2 billion (10.9%) on the total for the May 2016 year. Consents in May were up 17.4% ($520 million) to $1.871 billion.

Attribution: Statistics NZ tables.

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Consents down in short month but annual figure stays above 30,000

Building consents for new homes dropped by 672 from March to 2106 in April, and dropped by 255 compared to April last year, Statistics NZ said today.

Importantly for the Government, the annual rate of consents for new homes stayed above 30,000 – 30,371 for the latest 12 months, down from 30,626 for the year to March, up from 30,162 for the year to February.

In Auckland, the 726 consents for the month were ahead of 699 in April last year but well down from the 800 in February and 942 in March, and the 10,226 for the year were up on the 10,045 to February, 10,199 to March and up 9.3% on the 9353 for the year to April 2016.

Statistics NZ noted that Easter’s occurrence in April would have reduced building consents issued for the month. In addition, when Anzac Day fell on a Tuesday it resulted in another 4-day weekend for many.

You can only use that reasoning so far, though. The value of consents for new homes nationally in March last year (including an Easter break) was $1.021 billion, falling to $948 million in the Easter-less April. The value this March was $1.199 billion, falling to $921 million.

The value of consents for all construction fell from $2.077 billion in March to $1.351 billion in April (last year, $1.505 billion down to $1.430 billion), so one April against the other the fall was 5.5%. For the April year, the value of all construction was up 10.6% to $19.45 billion ($17.589 billion in 2016).

Non-residential consents for the month were down 10.5% to $411 million ($459 million), but for the year were up 9.7% to $6.4 billion ($5.85 billion). Floor area was down 28.8% for the month to 204,000m² (286,000m²), and was down 17% for the year to 2.64 million m² (3.19 million m²).

Home consents by sector, for month & year, previous period in brackets:

Houses: 1487 (1742), (1815), 21,179 (20,098), up 5.4% for the year
Apartments: 228 (25), 2874 (2094), up 37.2%
Retirement village units: 46 (259), 1702 (2139), down 20.4%
Townhouses, flat & units: 345 (335), 4616 (3707), up 24.5%

Around Auckland by ward, this April & last, and the April 2017 year & previous 12 months:

Region: 726 (699), 10,226 (9353)
Rodney: 81 (89), 882 (948)
Albany: 125 (135), 2508 (2316)
North Shore: 25 (17), 494 (528)
Waitakere: 25 (60), 617 (506)
Waitemata & Gulf: 166 (23), 1104 (857)
Whau: 51 (18), 343 (192)
Albert-Eden-Roskill: 25 (21), 674 (474)
Orakei: 4 (27), 283 (370)
Maungakiekie-Tamaki: 31 (26), 417 (463)
Howick: 28 (71), 452 (601)
Manukau: 32 (32), 394 (504)
Manurewa-Papakura: 73 (75), 1106 (890)
Franklin: 60 (105), 952 (704).

Attribution: Statistics NZ tables & release.

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Updated: Non-residential spurt lifts building consents over $2 million for month

Published 28 April 2017, updated 30 April 2017 with figures around Auckland region:
A sharp jump in non-residential projects in March lifted building consents over $2 billion/month for the first time.

The total for all construction was $2.077 billion ($1.505 billion in March 2016). The total for the year was $19.529 billion ($17.357 billion) – a $2.17 billion rise.

Non-residential consents jumped 82% from $460 million last March to $837 million this March. The floor area consented rose 41%, from 230,000m² to 325,000m².

These consents tend to be lumpy, making comparisons in a non-residential sector between one month & another meaningless. The big tickets in non-residential for this March were office (which includes public transport) $191 million, hotels $167 million, hospitals, nursing homes & health $104 million, shops, restaurants & bars $102 million.

Residential consents for March were up 17.4% compared to last March, and up 14.9% for the year. Consents for new homes totalled 2779 this March (2315 a year earlier), and 30,626 for the year (27,789).

Total residential consents for the month were worth $1.199 billion ($1.021 billion a year earlier), and for the year $12.865 billion ($11.038 billion for the previous 12 months).

Home consents by sector, for month & year, previous period in brackets:

Houses: 1923 (1815), 21,434 (19,721), up 8.7% for the year
Apartments: 252 (32), 2671 (2536), up 5.3%
Retirement village units: 197 (134), 1915 (1929), down 0.7%
Townhouses, flat & units: 407 (334), 4606 (3603), up 27.8%

Around Auckland by ward, this March & last, and the March 2017 year & previous 12 months:

Region: 942 (788), 10,199 (9566)
Rodney: 122 (100), 890 (912)
Albany: 227 (178), 2518 (2332)
North Shore: 53 (75), 486 (533)
Waitakere: 55 (51), 652 (483)
Waitemata & Gulf: 116 (14), 961 (1239)
Whau: 40 (17), 310 (187)
Albert-Eden-Roskill: 37 (40), 670 (478)
Orakei: 12 (9), 306 (386)
Maungakiekie-Tamaki: 26 (22), 412 (462)
Howick: 24 (49), 495 (559)
Manukau: 38 (48), 394 (486)
Manurewa-Papakura: 114 (93), 1108 (876)
Franklin: 78 (92), 997 (633)

Attribution: Statistics NZ tables & release.

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Updated: Home consents up slightly, but revision lifts November figure to 12-year high

Published 31 March 2017, additional material 1 April 2017
Consents for new homes issued in February were up slightly – by 39 – over February last year, to 2418, raising the tally for 12 months to 30,162.

Perhaps of greater note was the revision of the November consent figure, from 2973 to 3005 new homes. I think (without time to check fully) this is the first month of 3000-plus consents since the 3447 in June 2004, which included 977 apartment consents.

That high in 2004 came 30 years after the previous high, in 1974, which was toward the end of another construction boom.

The November 2016 high theoretically came without the push from apartments, only 375 of them consented that month. But, including the 507 flats & townhouses and the 205 retirement village units (recent extra segmentation by Statistics NZ), consents for intensive construction totalled 1087.

The suburban unit/townhouse segment has fallen behind the (mostly central) apartments sector only twice in the last 18 months. That segment of the market has seen 24% growth over the last 12 months to 4533 units (3651 in the previous 12 months), whereas apartment consents have slipped 4.8% to 2451 (2574) and retirement village consents have slipped 6.2% to 1852 (974).

Standalone house consents have risen 9.1% over the 12 months to 21,326 (19,546).

Residential consents in Auckland were up slightly for the month to 800 (787) to 10,045 (9534) for the February year.

The total value of residential consents nationally in February fell 1.5% from a year ago to $1.06 billion ($1.077 billion), but the annual figure remains 14.3% ahead at $12.5 billion ($10.94 billion).

Additional material:

Around Auckland by ward, this February & last, and the February 2017 year & previous 12 months:

Region: 800 (787), 10,045 (9275)
Rodney: 87 (80), 868 (888)
Albany: 196 (182), 2469 (2362)
North Shore: 72 (19), 508 (473)
Waitakere: 44 (44), 648 (474)
Waitemata & Gulf: 73 (179), 859 (1246)
Whau: 2 (8), 287 (179)
Albert-Eden-Roskill: 33 (20), 673 (456)
Orakei: 71 (8), 303 (485)
Maungakiekie-Tamaki: 6 (21), 408 (467)
Howick: 51 (51), 520 (602)
Manukau: 14 (51), 404 (454)
Manurewa-Papakura: 75 (67), 1087 (865)
Franklin: 76 (57), 1011 (583)

The total value of residential consents nationally in February fell 1.5% from a year ago to $1.06 billion ($1.077 billion), but the annual figure remains 14.3% ahead at $12.5 billion ($10.94 billion).

Residential consents this February & last, and the February 2017 year & previous 12 months, in a selection of provinces:

Northland: 131 (80), 1261 (896)
Waikato: 294 (274), 3512 (3160)
Bay of Plenty: 226 (200), 2517 (2055)
Wellington: 133 (113), 2023 (1711)
Canterbury: 361 (525), 5798 (6319)

Commercial presents mixed picture

Commercial sectors present a very mixed picture. Overall, floor space is down in this month’s & year’s consents, but values are up. There’s not an even picture across sectors.

Non-residential consent floorspace for February was down 12.9% to 189,000m² (217,000m²), and for the year down 18.2% to 2,631,000m² (3,218,000m²).

Non-residential consent value for February was up 10.3% to $410 million ($372 million), and for the year up 5.3% to $6.086 million ($5.777 million).

Big changes by value for the year were hostels, boarding houses & prisons up 42.8% to $227 million; and hotels, motels & other short-term accommodation up 85.2% to $276 million.

The value of consents for all construction for the month fell 6.2% to $1.492 million ($1.59 million), and for the year it was up 10% to $18.956 billion ($17.238 billion).

Attribution: Statistics NZ tables.

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Auckland above 10,000 home consents/year again

Auckland’s consent level for new homes got back above an annual rate of 10,000 in January after dipping in December. The 512 consents in January were 6 above the number a year earlier.

For the year, Auckland had 10,032 consents for new homes, compared to 9930 in the 12 months to December and 9275 in the 12 months to January 2016.

Nationally, consents for the month were up 3.4%, from 1695 to 1752, and for 12 months they were up 11.1%, from 27,124 to 30,123.

January is the traditional quiet month everywhere, but not usually as quiet as it got in Auckland’s central Waitemata & Gulf ward, where consents numbered only 9 in December and fell to 4 in January.

The Waitemata part of that ward covers the cbd & its western fringe, very much apartment & townhouse territory, so consent applications tend to be lumpy. In 8 of the last 12 months the ward had fewer than 50 consents, 3 months of 114, 155 & 179, and one outstanding month when 353 consents were issued.

In the previous 12 months, the ward’s consents exceeded 100 only twice, but they were months of 405 & 278, contributing to a total for 12 months that was 20% higher.

Looking forward into the new era of Auckland’s mostly approved unitary plan, when more intensification will be possible across 90% of suburbia, developers may disperse their search for cheaper land, resulting in more intensification in smaller centres.

Consents nationally for standalone houses fell slightly for the month but were up nearly 11% over 12 months, while consents for apartments have dipped slightly over 12 months and those for suburban townhouses & units are up nearly 28%.

Around Auckland by ward, this January & last, and the January 2017 year & previous 12 months:

Region: 512 (506), 10,032 (9275)
Rodney: 55 (60), 861 (865)
Albany: 194 (123), 2455 (2304)
North Shore: 17 (13), 455 (473)
Waitakere: 18 (46), 648 (465)
Waitemata & Gulf: 4 (80), 965 (1160)
Whau: 7 (11), 293 (189)
Albert-Eden-Roskill: 22 (29), 660 (449)
Orakei: 8 (10), 240 (490)
Maungakiekie-Tamaki: 25 (18), 423 (460)
Howick: 15 (17), 520 (572)
Manukau: 17 (36), 441 (419)
Manurewa-Papakura: 50 (37), 1079 (848)
Franklin: 80 (26), 992 (581)

Consents for the 4 residential market segments in January & the 12 months to January 2017 compared to the previous January & previous 12 months:

Houses: 1253 (1286), -2.6%; 21,277 (19,183), 10.9%
Apartments: 116 (89), 30.3%; 2430 (2511), -3.2%
Retirement village units: 98 (135), -27.4%; 1915 (1908), 0.4%
Townhouses etc: 285 (185), 54.1%; 4501 (3522), 27.8%.

Sector & total values against January 2016 or the previous 12 months:

New homes: $619 million/month ($641 million), -3.5%; $10.625 billion/year ($8.906 billion), up 19.3%
Alterations & additions: $129 million/month ($115 million), 12.4%; $1.899 billion/year ($1.728 billion), up 9.9%
Total residential: $748 million/month ($756 million), -1.1%; $12.524 billion/year ($10.635 billion), up 17.8%
Non-residential: $338 million/month ($310 million), 9.2%; $6.048 billion/year ($5.876 billion), up 2.9%
Total, including non-building: $1.108 billion/month ($1.083 billion), 2.3%; $19.055 billion/year ($16.922 billion), up 12.6%.

Earlier stories:
6 March 2017: Third quarter of plus-32% rises in Auckland construction input
10 February 2017: Townhouses & flats dominate shift in home styles

Attribution: Statistics NZ tables.

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Townhouses & flats dominate shift in home styles

Suburban townhouses & flats dominated the shift in building consent figures away from standalone houses last year.

The townhouse & flats segment of the market – essentially lowrise intensification outside the central urban areas – has grown by 330% since 2011, while the standalones have steadily lost market share, falling from 81% in 2011 to 71%.

Consents for all new homes last year totalled 29,970, up 10.5% on the 27,132 in 2015, according to Statistics NZ’s figures out yesterday.

Houses made up 21,310 of the 2016 total, 19,038 the previous year, so a rise of 11.9% for the year. For the month of December, however, the 1580 consents were down 4.9% for that month a year earlier.

Consents for the 4 market segments in December & the whole of 2016 compared to the previous December & the whole of 2015 were:

Houses: 1580 (1661), -4.9%; 21,310 (19,038), 11.9%
Apartments: 138 (427), -67.7%; 2307 (2539), -9.1%
Retirement village units: 193 (159), 21.4%; 1952 (1899), 2.8%
Townhouses etc: 294 (291), 1%; 4401 (3656), 20.4%.

Sector & total values against December 2015 or the previous 12 months:

New homes: $833 million/month ($868 million), -4%; $10.648 billion/year ($8.796 billion), up 21%
Alterations & additions: $156 million/month ($149 million), 4.3%; $1.885 billion/year ($1.727 billion), up 9.2%
Total residential: $989 million/month ($1.017 billion), -2.8%; $12.532 billion/year ($10.523 billion), up 19.1%
Non-residential: $595 million/month ($555 million), 7.2%; $6.019 billion/year ($5.919 billion), up 1.7%
Total, including non-building: $1.612 billion/month ($1.611 billion), 0.1%; $19.03 billion/year ($16.859 billion), up 12.9%.

Housing consents around the country:

Auckland: 740 (947), 9930 (9251)
Whangarei: 45 (41), 662 (447)
Kaipara: 20 (19), 267 (182)
Hamilton: 76 (142), 1179 (1205)
Bay of Plenty: 177 (176), 2520 (809)
Wellington region: 115 (106), 1992 (1721)
Christchurch & districts: 344 (510), 5202 (5830)
Queenstown-Lakes: 79 (62), 945 (816)

Around Auckland by ward:

Rodney: 60 (103), 866 (844)
Albany: 170 (156), 2288 (2274)
North Shore: 28 (143), 451 (480)
Waitakere: 43 (31), 676 (454)
Waitemata & Gulf: 9 (93), 1041 (1157)
Whau: 14 (24), 297 (201)
Albert-Eden-Roskill: 112 (144), 667 (445)
Orakei: 15 (70), 242 (506)
Maungakiekie-Tamaki: 129 (19), 416 (467)
Howick: 22 (46), 522 (585)
Manukau: 21 (26), 460 (406)
Manurewa-Papakura: 59 (55), 1066 (855)
Franklin: 58 (37), 938 (577).

Attribution: Statistics NZ tables.

Related story today: Smith exultant about figures that are plainly inflated

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Smith exultant about figures that are plainly inflated

Former housing minister Nick Smith, now building & construction minister, heaps praise on himself for a job extremely well done: “Building activity is at a record high, topping $19 billion for 2016 after 5 straight years of strong growth”.

But we all know it’s not true. Although Dr Smith said of yesterday’s building consent report that the figures he was quoting were “in inflation-adjusted terms”, both he & the rest of New Zealand know construction costs, land prices & house prices have been distorted way beyond the realm of the Reserve Bank’s narrow inflation focus.

It’s a sector which can be measured very accurately, but the figures Statistics NZ releases monthly on building consents for new homes carry distortions because of how applications are made. In some cases such as staged developments, consent applications & costs may be reported in different time periods. However, over a year, I suspect it’s reasonable to use these figures to carry out the calculations I’ve done here on changes in floor areas, values and values/m² of construction. The value of land is excluded from building consent figures.

Going back to the bottom of the market following the global financial crisis, 2011, the statistics show an average floor area of 191.6m². It rose the next year, declined for 3 years and recovered slightly in 2016. The percentage changes were rises of 2.9% in the first year and 1.8% in the last year, but falls of 2.7%, 2.6% & 4.3% in the intervening years.

The average value/dwelling was just under $280,000 in 2011, and rose in steps of $6600-16,000 during the next 4 years, equating to gains of 5.75%, 3.3%, 4% & 2%. Then, in 2016, the average jumped $31,000 to $355,300, a leap of 9.6%.

Putting those figures together to see what the consent value/m² has been, the starting point in 2011 was $1459/m². The end point, the average for 2016, was $1951/m² – a rise of $492/m² over 5 years, or 34%. In the first year off the market bottom the rise was 2.75%, but it’s since been consistently above 6% – 6.15% in 2013, then 6.75%, 6.71% and, last year, 7.67%.

An important factor in the equation is the falling proportion of total housing categorised as houses, distinct from 3 intensive categories – apartments, retirement village units and suburban townhouses & units – all of which generally have smaller floorplates than the average house but will generally be priced more highly per m² of building. The houses category fell from 81% of all housing consents in 2011 (when the apartment sector almost disappeared) to 71% in 2016.

Dr Smith habitually talks about consent figures as if they were actual construction. Statistics NZ doesn’t supply regular figures which would show the percentage of consents that turn into actual construction. Those percentages vary cyclically, according to figures I’ve seen long ago – heading into the peak of a boom the consent figures will have risen steeply, but once the boom ends actual construction can plummet.

In his release on the consent figures yesterday, Dr Smith said: “This is the longest & strongest growth phase in building activity in New Zealand history. It involves record levels of investment in homes, commercial buildings & infrastructure. The total value of consents in 2016, at $19 billion [for all consents, not just residential], is the highest ever and 30% more than the previous peak last decade, in inflation-adjusted terms.

“I am particularly encouraged by the ongoing strong growth in residential building activity, that has increased 19% nationally & 27% in Auckland over the past year. This is the fifth straight year of strong growth. You cannot grow a sector as large or as complex as building at more than about 20% compound/year without incurring problems with quality.

“The number of homes being built in 2016 – 29,970 nationally & 9930 in Auckland – is more than double that of 5 years ago and is the highest since 2004. This growth gives me confidence we will have the number of homes increasing in line with population growth by the end of the year.

“This ongoing strong growth shows the Government’s programme to increase housing supply is working. We have aggressively increased land supply with special housing areas in the short term, changes to Auckland’s planning in the medium term, and the national policy statement on urban development capacity & Resource Management Act reforms in the long term.

“We have complemented this with the Crown land programme and a record level of direct Government projects to build homes, such as Hobsonville. We’ve also provided record levels of assistance for first-homebuyers with the KiwiSaver HomeStart scheme, which has helped more than 20,000 people into their first home with about $500 million in KiwiSaver withdrawals for a deposit.

“This Government is, step by step, development by development, getting on and addressing New Zealand’s housing challenges.”

The figure of $19 billion includes $12.5 billion for new homes and alterations & additions to homes, $6 billion for non-residential buildings and just under half a billion dollars for non-building construction. The housing component has been rising rapidly – by 25.4% in 2012, 28% in 2013, then 20.5%, 10.5% and, last year, 19.1%.

The non-residential sector had 2 strong years – rises of 21.5% in 2014 & 15.9% in 2015, but was down to a 1.7% rise last year.

Related story today: Townhouses & flats dominate shift in home styles

Attribution: Statistics NZ tables & release, ministerial release.

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Building consent highs still don’t match migrant demand

Statistics NZ said today consents for new homes nationally hit an 11-year high in November, Auckland hit a 12-year high for a month and for a year, and Auckland consents represented “almost 40%” of the month’s total.

Against those impressive statistics, the figures show:

  • Auckland is not meeting demand for housing arising from net immigration, let alone natural population increase
  • Christchurch consents continued to tail off as the post-earthquake rebuild has wound down
  • Despite that, Auckland’s share of total consents nationally was 5 percentage points below its national market share at the 2004 high, and
  • Non-residential consent growth has been lacklustre over the last 5 years.

Below, first the figures followed by considerable detail, including some international aspects.

The bald figures against November 2015 or the previous 12 months:
2973 (2831) November consents for new homes, up 5%
30,303 (30,161) new home consents in November year, up 13.1%
$1.001 billion ($911 million) value for month, up 9.9%
$167 million ($153 million) additions & alterations for month, up 9.4%
$1.88 billion ($1.72 billion) additions & alterations for year, up 9%
$1.168 billion ($1.064 billion) total residential consents for month, up 9.8%
$12.56 billion ($10.34 billion) total residential consents for year, up 21.5%

Auckland:
1156 (966) Auckland consents for the month, up 19.7%
10,137 (8934) Auckland consents for year, up 13.5%

Residential sectors:
1886 (1864) new house consents for month, up 1.2%
375 (270) apartment consents for month, up 38.9%
205 (321) retirement village units for month, down 36.1%
507 (376) townhouses & suburban units for month, up 34.8%
21,391 (18,823) new house consents for year, up 13.6%
2596 (2263) apartment consents for year, up 14.7%
1918 (2086) retirement village units for year, down 8.1%
4398 (3621) townhouses & suburban units for year, up 21.5%

Non-residential:
$411 million ($531 million) total for month, down 22.6%
$5.98 billion ($5.8 billion) total for year, up 3.2%
Offices, administration & public transport, $102 million ($114 million) for month, down 10.5%
Offices etc, $1.15 billion ($1.16 billion) for year, down 0.9%
Education buildings, $58 million ($99 million) for month, down 41%
Education buildings, $1.17 billion ($1.08 billion) for year, up 8.4%

Totals (residential, non-residential & non-building construction):
$1.61 billion ($1.62 billion) for month, down 1%
$19.03 billion ($16.55 billion) for year, up 15%

Auckland & its wards, residential month & year:
Auckland: 1156 (966), 10,137 (8934)
Rodney: 55 (75), 909 (787)
Albany: 254 (196), 2274 (2341)
North Shore: 26 (81), 566 (357)
Waitakere: 84 (44), 664 (466)
Waitemata & Gulf: 155 (68), 1125 (1071)
Whau: 19 (23), 307 (185)
Albert-Eden-Roskill: 104 (40), 699 (377)
Orakei: 42 (104), 297 (457)
Maungakiekie-Tamaki: 21 (34), 306 (481)
Howick: 25 (52), 546 (559)
Manukau: 129 (65), 465 (393)
Manurewa-Papakura: 116 (112), 1062 (852)
Franklin: 126 (72), 917 (608)

Outside Auckland:
Whangarei: 70 (51), 658 (444)
Kaipara: 27 (14), 266 (171)
Hamilton: 107 (100), 1245 (1131)
Tauranga: 168 (176), 1704 (1337)
Wellington region: 81 (291), 1536 (1449)
Christchurch & districts: 390 (525), 5368 (6008)
Queenstown-Lakes: 71 (88), 928 (793)

The monthly high

2973 consents for new homes were issued nationally in November, up from 2575 in October, 2831 in November 2015, and the 7th successive month of consents exceeding 2500. January was the only month of the year when consents fell below 2300 (to 1695, a normal summer fall; consent figures for December will be released on 29 January).

Statistics NZ attributed the 11-year high for a month to “increased consents in Auckland & the usual pre-Christmas rush”. The previous high for a month was in March 2005, when 3027 new homes were consented. As I wrote in 2005, the numbers that March were skewed for the second time in 9 months: “This time it was for a combination of 2 increases, both effective from 31 March. One was an increase in the Department of Building & Housing levy, the other new building requirements under the new Building Act – not a levy, but extra requirements.”

The annual figures, their trajectory and foreign influences

30,303 consents were issued nationally for the November year, 13.1% up on the 26,793 in the previous 12 months. The annual rise has been steady since 13,529 consents were issued in the November 2011 year, which was the downpoint of the global financial crisis. On a rolling annual basis, consents fell just short of 30,000 in September and got just over that mark, to 30,161, in October.

Consents averaged just 2200/month over the first 4 months of 2016 and 2700/month through to November. Increasing to 31,000 consents/year will be hard to achieve over the next 6 months unless constraints are reduced on loans to investors and on the ability of first-homebuyers to borrow, and construction costs are constrained. The main cause for those constraints to change is that it’s election year.

Winding back immigration would also affect the election, which means the housing pressure in Auckland should continue unless the other big factor, Chinese investor interest, wanes. The Chinese government signalled tightening on the export of funds over the last few weeks but, as a report from the Asian Financial Forum in Hong Kong on Monday indicated, China’s largest sovereign wealth fund, CIC (China Investment Corp), expects to invest more in the US this year than it did in 2016. It spent $US1.7 billion on 2 Manhattan properties in 2016, the second of those a $US1 billion investment for a 45% stake in a building in the Rockefeller Centre in December.

China’s foreign exchange reserves have slid from a peak of $US4 trillion in June 2014 to $US3 trillion last month – incredibly, a dangerously low level. Trading Economics said the yuan depreciated 6.6% against the $US in 2016, the biggest one-year loss since 1994.

As analyst Jim Rickards has posted in various Daily Reckoning financial newsletters over the last few weeks, China runs into a fight with new US president Donald Trump if it devalues (more), but it doesn’t have the leeway to support its currency’s rise. Further devaluation or the threat of it, official or in effect, would encourage Chinese citizens to keep finding ways of getting money out of the country and, in the blink of an eye, into assets – such as New Zealand property.

Minister says it’s as fast as you can go

Nick Smith, who was housing minister (a title Bill English abolished after taking over as prime minister in December) and remains building & construction minister, said it was the first time in 12 years that consents for new homes in Auckland had topped 10,000.

“The 1156 consents issued in Auckland during November makes it the strongest month in more than 10 years. It is more than treble the 325 consents issued in Auckland in November 2008, when National became government. We need to consistently achieve more than 1000 consents/month in Auckland to match population growth….

“This is the 5th straight year of strong growth in construction, with growth averaging more than 20%/year. This is as fast as you can practically grow a sector as large & as complex as construction without compromising quality.

“This ongoing strong growth shows the Government’s programme to increase housing supply is working. We have aggressively increased land supply with special housing areas in the short term, changes to Auckland’s planning in the medium term and the national policy statement on urban development capacity & Resource Management Act reforms in the long term.

“We have complemented this with the Crown land programme and a record level of direct Government projects to build homes, such as Hobsonville. We’ve also provided record levels of assistance for first-homebuyers with the KiwiSaver HomeStart scheme, which has helped more than 20,000 people into their first home with about $500 million in KiwiSaver withdrawals for a deposit.

“This Government is step by step, development by development, getting on and addressing New Zealand’s housing challenges.”

Consent figures fall short of migrant need

The statistics show 38.9% of new home consents in November were in Auckland, up from 34.1% in November 2015. For the November year, Auckland’s market share was 33.5% (29.6%). Back in November 2004, the previous high for Auckland, the 1181 consents represented 44% of the market.

At a ratio of 2.7 residents:household, Auckland would have needed 12,421 new homes for its net intake of migrants for the latest year. The 10,137 consents for the November year (homes to be built) represent 81.6% of homes required in the last year. But for homes to be built in time to receive those immigrants in the last year, consents would have been needed beforehand. In the previous 12 months to November 2015, the 8934 consents issued for new homes in Auckland would have met 71.9% of the requirement for the next 12 months’ immigrants, ignoring natural increase.

Under the government-council special housing accord that ran from October 2013-September 2016 (with an extension for approved areas not fully processed), the target was 39,000 consents over 3 years (initially emphasised as houses, later emphasised as houses & sections consents, though the Ministry of Business, Innovation & Employment thinks it’s just houses) – 9000 the first year, 13,000 the second, 17,000 the third.

Dr Smith and Auckland’s mayor until last October, Len Brown, maintained they achieved 123% of the target in year 1 and 98% of the target in year 2 – 23,806 dwellings consented & new sections created.

The final government-council report on the accord said 37,538 net sections had been created & dwellings consented – 96% of target. It added: “Over the next 14 years, over 98,000 new greenfield & brownfield dwellings & sections are known to be in the development pipeline delivering an average of just over 7000 dwellings/year.”

Non-residential still in doldrums

Non-residential consents almost matched those for new homes in the November 2011 year – $3.64 billion against the residential $3.756 billion. But in the next 5 years, consents for commercial & public sector buildings have been left well behind.

Over those 5 years consents for new homes rose steadily – to almost $5 billion, then $6.3 billion, $7.7 billion, $8.6 billion and, for the last 12 months, $10.7 billion. That’s a total $38.3 billion for new homes since 2011.

In contrast, the non-residential sector’s consents almost made it to $4 billion in 2012, got to $4.15 billion the next year, then to $5 billion, $5.8 billion & just under $6 billion for the latest 12 months – a total just under $25 billion.

Links:
MBIE, Auckland housing accord
Final accord report
Mingtiandi, 17 January 2017: No capital controls here! China’s CIC set to boost US investments in 2017
Daily Reckoning, 17 January 2017: China’s bogus currency war promise
Trading Economics: China foreign currency reserves

Earlier stories:
23 December 2016: 48% of net migrant inflow stops in Auckland
2 November 2016: National policy statement on urban development capacity takes effect in December
1 November 2016: Auckland share of new home consents drops, intensive ratio holds

Attribution: Statistics NZ, MBIE, Mingtiandi, Daily Reckoning, Trading Economics, ministerial release.

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Intensive housing moves further ahead in suburbs

Suburban intensification moved further ahead of the apartments & retirement village sectors in number of building consents & market share nationally in 2016.

Statistics NZ’s figures for October, released on 20 December, show a 2771 gain in consents for new houses in the 12 months to October, apartments up 154 to 2491, retirement village unit up 152 to 2034, suburban townhouses, flats & units up 702 to 4267.

Those figures show small shifts in market share from the previous 12 months – houses up 0.35% to 70.85%, apartments down 0.6% to 8.26%, retirement village units down 0.4% to 6.74%, and a 0.65% gain by townhouses & units.

Over the 5 years since the 2011 market downturn, however, the changes are more seismic. The standalone housing sector has lost 10% market share, down from 80.7% at October 2011 to 70.85%. Apartments have picked up nearly 5% over the 5 years from a starting point of 3.44%, the retirement village sector lost 1.3% from just over 8%, and the townhouse & units segment of the market has gained 6.35% from 7.8% 5 years ago.

Consents for new homes nationally in the October 2011 year totalled just 13,615, of which houses contributed 10,992 consents. Move forward to the October 2016 year, house consents were up 94% to 21,369; apartment consents rose 432%, from 468 to 2491; retirement village units rose 86%, from 1093 to 2034; and townhouses & units rose 302%, from 1062 to 4267.

Earlier story:
20 December 2016: Consents breach 30,000/year mark

Attribution: Statistics NZ.

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Consents breach 30,000/year mark

Consents for new homes fell just short of 30,000/year in September but made it over that mark in October for the first time in 11 years.

Statistics NZ said yesterday the 30,161 consents for the year were over twice the number at the post-global financial crisis market bottom in 2011 (13,615 in the October 2011 year, which was a 60-year low), 10,000 short of the all-time high of 40,000 reached in early 1974 and 3000 short of the 29-year high in mid-2004.

Statistics NZ business indicators senior manager Neil Kelly said: “One-third of the homes consented over the past year were in Auckland. That’s almost 10,000, compared with 9000 in the previous year.

“Canterbury & Waikato also feature quite prominently in these statistics, although in Christchurch the post-quake residential rebuild is slowly winding down.”

Compared to a year ago, Auckland’s 9947 consents for the latest 12 months represented 32.98% of national consents, up in number from 8935 but down in market share from 33.87%.

Nationally, the 30,161 consents for the year were up 14.3% from the previous 12 months’ 26,382.

For the month of October, consents nationally were up 9.6% on a year earlier at 2575 (2349). The latest figure was up 25 on September but down on consents in the previous 3 months.

Auckland consents for October totalled 792 (805 a year earlier).

Around the region:

Rodney: 61 (63), 929 (778)
Albany: 205 (289), 2216 (2242)
North Shore: 25 (13), 621 (290)
Waitakere: 52 (29), 624 (461)
Waitemata & Gulf: 12 (35), 1038 (1339)
Whau: 13 (9), 311 (254)
Albert-Eden-Roskill: 67 (57), 635 (412)
Orakei: 23 (21), 359 (377)
Maungakiekie-Tamaki: 42 (74), 319 (493)
Howick: 25 (40), 573 (540)
Manukau: 30 (40), 401 (362)
Manurewa-Papakura: 120 (77), 1058 (817
Franklin: 117 (58), 863 (570)

  • I won’t have a chance to finish this item until this afternoon, when it will include sector figures & dollar calculations.

Attribution: Statistics NZ tables, graph & release.

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