New home consents have fallen to the lowest point in five years.
Stats NZ figures show fewer than 34,000 new homes were consented in the year to June - a 24 percent fall annually.
Consents for multi-unit homes, including townhouses, apartments, retirement village units and flats are down 28 percent.
Construction sector advisor Mike Blackburn says this downturn has impacted the whole country.
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Speaker 1 (00:00):
News Talk Zibby back to business. New home consents are
at the lowest there've been since twenty nineteen. According to
Stat's New Zealand And the year to June, there were
thirty three thousand, six hundred and twenty seven new homes
consented and that is down twenty four percent. The number
of consents for multi unit homes, particularly apartments and townhouses
(00:21):
down twenty eight percent over the same period. Christ Church
based management consultant and construction sector advisor Mike Blackburn is
on the line and talks to me. Now, Hello, Mike,
goody Andrew, how are you very good? I am not
surprised by this due to the whole supply costs and
inflation scenario and what's been happening with constructions. But what
are the factors that have meant this drop in consents?
Speaker 2 (00:45):
Well, look, building consent numbers are down right across New
Zealand and have been for probably the last eighteen months
or so. Look, probably the most important thing to remember
is that twenty twenty one and twenty twenty two were
absolutely all time record years for new residential construction in
New Zealand, and so even though building consent numbers are
(01:09):
down they have come off extraordinarily highs. So what we're
seeing in Auckland, for example, is that building consent numbers
a year on year are actually down by forty six percent,
In Wellington they're down by thirty eight and in christ
Huts they're down by twenty percent. So all the major
(01:31):
regions are sort of feeling the same effects.
Speaker 1 (01:34):
There's a fluctuation though, there's a waxing and a waning
of numbers because it depends on the developers freeing up
either greenfields or brownfields and they're actually getting the money
in place.
Speaker 2 (01:44):
Look, that's true. You mentioned multi unit developments, and certainly
in Auckland and in Canterbury, or certainly in christ Church,
multi unit dwellings have been sort of the predominant type
of new construction that we've seen, certain accounting for significantly
more than half here in christ Church for the last
(02:05):
couple of years, it's been close to seventy percent of
all new construction. Now, largely that's been driven by the
investor market. Obviously, if we go back to when the
last government changed the tax deductibility rules that drove people
away from existing dwellings, older dwellings to new construction and
so therefore the price point of multi unit construction saw
(02:29):
a significant boom in that. As the new tax rules
come in, we'll probably see mum and dad investors perhaps
move away from these newer units to some older units. Certainly,
the cost of construction construction inflation has been very, very
high over the last couple of years. That seems to
(02:51):
have sort of waned a little bit, and most merchants
and supplieres that I'm talking to are saying that because
the market is competitive, pricing is very much at play.
But again, year on year across all of New Zealand,
we've seen the cost of construction of building a new
(03:11):
house increased by about nine percent.
Speaker 1 (03:14):
Absolutely, also the cost of actually getting your consents in
the first place. Funny enough, I actually bumped into a
lawyer today who said I've just done a consent for
a big old department building. And I said, you mean
you've done the application for a consent and he said no.
Under COVID fast track legislation, I can actually do the
whole consent, so we have the ability to get stuff going,
but we just need the money in place and the
(03:36):
teaper materials in place.
Speaker 2 (03:39):
Well, look, that was one of the things. And I
was listening to what you said right at the start
of your show where we was talking about sort of
the economy and access to finance, and those are certainly
major influencers on the construction industry as to why we've
seen building consent numbers fall away for builders and developers.
If I go back to twenty twenty one twenty twenty two,
(04:00):
when our interest rates were low and money was readily available,
buying off the plans even before a builder had started
any sort of construction was really really commonplace. Today, you'd
be there's literally no appetite for buying off the plans,
(04:21):
and so builders and developers are being forced to fund
the development themselves, which is another reason why we've sort
of seen a significant drop off in that level of construction.
Speaker 1 (04:33):
So when will it pick up again? And I know, yeah,
I'm asking for you a crystal ball, but yeah, give
it a question.
Speaker 2 (04:40):
Well, look, I wrote in my report in May that
I was starting to see some light on the horizon. Now,
what you've got to remember is that for most construction activity,
it generally runs between twelve and eighteen months behind a
change in an e gnomic activity, and there's always that
(05:03):
lag so I deal with a lot of land developers,
and one of the things that I'm starting to see
is a lot more interest in what is likely to
happen in the economy, because again, land development takes place
again twelve months, two years, three years before any sort
of residential activity. So I'm starting to see an increase
(05:24):
in an interest and development activity in that market. Already,
I believe that the building consent numbers will remain flat
through till at least the end of the year. But
of course the smart developers are starting to anticipate what
that change in the market is likely to be and
will be starting to gear up their activity.
Speaker 1 (05:45):
Now, any turn in the economy, any dropping the interest rates,
combined with the high immigration, we'll actually go force people
to go, Yeah, there's definitely a market there that wants
in a house and where we go. That's what I'm hoping.
Speaker 2 (05:58):
Look that Look, that's absolutely true. And immigration, So if
you look at the latest immigration over the last twelve
to eighteen months, we've had an influx of people of
summer in the vicinity of a one hundred and forty
thousand people. Now they're not they're here for medium to
long term. So they're not staying in motels and Airbnb,
and they will all need a rental accommodation or ownership accommodation.
(06:21):
So that's the equivalent of another forty five thousand houses
that we need over and above business as usual. So
the next couple of years I see as very very
positive for residential construction right across New Zealand.
Speaker 1 (06:36):
Loving that, Loving that, Mike, Thank you so much, Mike
Begburn crash It's based management consultant and construction sector advisor.
Speaker 2 (06:43):
For more from Hither Duplessy Allen Drive, Listen live to
news talks. It'd be from four pm weekdays, or follow
the podcast on iHeartRadio
News Talk Zibby back to business. New home consents are
at the lowest there've been since twenty nineteen. According to
Stat's New Zealand And the year to June, there were
thirty three thousand, six hundred and twenty seven new homes
consented and that is down twenty four percent. The number
of consents for multi unit homes, particularly apartments and townhouses
(00:21):
down twenty eight percent over the same period. Christ Church
based management consultant and construction sector advisor Mike Blackburn is
on the line and talks to me. Now, Hello, Mike,
goody Andrew, how are you very good? I am not
surprised by this due to the whole supply costs and
inflation scenario and what's been happening with constructions. But what
are the factors that have meant this drop in consents?
Speaker 2 (00:45):
Well, look, building consent numbers are down right across New
Zealand and have been for probably the last eighteen months
or so. Look, probably the most important thing to remember
is that twenty twenty one and twenty twenty two were
absolutely all time record years for new residential construction in
New Zealand, and so even though building consent numbers are
(01:09):
down they have come off extraordinarily highs. So what we're
seeing in Auckland, for example, is that building consent numbers
a year on year are actually down by forty six percent,
In Wellington they're down by thirty eight and in christ
Huts they're down by twenty percent. So all the major
(01:31):
regions are sort of feeling the same effects.
Speaker 1 (01:34):
There's a fluctuation though, there's a waxing and a waning
of numbers because it depends on the developers freeing up
either greenfields or brownfields and they're actually getting the money
in place.
Speaker 2 (01:44):
Look, that's true. You mentioned multi unit developments, and certainly
in Auckland and in Canterbury, or certainly in christ Church,
multi unit dwellings have been sort of the predominant type
of new construction that we've seen, certain accounting for significantly
more than half here in christ Church for the last
(02:05):
couple of years, it's been close to seventy percent of
all new construction. Now, largely that's been driven by the
investor market. Obviously, if we go back to when the
last government changed the tax deductibility rules that drove people
away from existing dwellings, older dwellings to new construction and
so therefore the price point of multi unit construction saw
(02:29):
a significant boom in that. As the new tax rules
come in, we'll probably see mum and dad investors perhaps
move away from these newer units to some older units. Certainly,
the cost of construction construction inflation has been very, very
high over the last couple of years. That seems to
(02:51):
have sort of waned a little bit, and most merchants
and supplieres that I'm talking to are saying that because
the market is competitive, pricing is very much at play.
But again, year on year across all of New Zealand,
we've seen the cost of construction of building a new
(03:11):
house increased by about nine percent.
Speaker 1 (03:14):
Absolutely, also the cost of actually getting your consents in
the first place. Funny enough, I actually bumped into a
lawyer today who said I've just done a consent for
a big old department building. And I said, you mean
you've done the application for a consent and he said no.
Under COVID fast track legislation, I can actually do the
whole consent, so we have the ability to get stuff going,
but we just need the money in place and the
(03:36):
teaper materials in place.
Speaker 2 (03:39):
Well, look, that was one of the things. And I
was listening to what you said right at the start
of your show where we was talking about sort of
the economy and access to finance, and those are certainly
major influencers on the construction industry as to why we've
seen building consent numbers fall away for builders and developers.
If I go back to twenty twenty one twenty twenty two,
(04:00):
when our interest rates were low and money was readily available,
buying off the plans even before a builder had started
any sort of construction was really really commonplace. Today, you'd
be there's literally no appetite for buying off the plans,
(04:21):
and so builders and developers are being forced to fund
the development themselves, which is another reason why we've sort
of seen a significant drop off in that level of construction.
Speaker 1 (04:33):
So when will it pick up again? And I know, yeah,
I'm asking for you a crystal ball, but yeah, give
it a question.
Speaker 2 (04:40):
Well, look, I wrote in my report in May that
I was starting to see some light on the horizon. Now,
what you've got to remember is that for most construction activity,
it generally runs between twelve and eighteen months behind a
change in an e gnomic activity, and there's always that
(05:03):
lag so I deal with a lot of land developers,
and one of the things that I'm starting to see
is a lot more interest in what is likely to
happen in the economy, because again, land development takes place
again twelve months, two years, three years before any sort
of residential activity. So I'm starting to see an increase
(05:24):
in an interest and development activity in that market. Already,
I believe that the building consent numbers will remain flat
through till at least the end of the year. But
of course the smart developers are starting to anticipate what
that change in the market is likely to be and
will be starting to gear up their activity.
Speaker 1 (05:45):
Now, any turn in the economy, any dropping the interest rates,
combined with the high immigration, we'll actually go force people
to go, Yeah, there's definitely a market there that wants
in a house and where we go. That's what I'm hoping.
Speaker 2 (05:58):
Look that Look, that's absolutely true. And immigration, So if
you look at the latest immigration over the last twelve
to eighteen months, we've had an influx of people of
summer in the vicinity of a one hundred and forty
thousand people. Now they're not they're here for medium to
long term. So they're not staying in motels and Airbnb,
and they will all need a rental accommodation or ownership accommodation.
(06:21):
So that's the equivalent of another forty five thousand houses
that we need over and above business as usual. So
the next couple of years I see as very very
positive for residential construction right across New Zealand.
Speaker 1 (06:36):
Loving that, Loving that, Mike, Thank you so much, Mike
Begburn crash It's based management consultant and construction sector advisor.
Speaker 2 (06:43):
For more from Hither Duplessy Allen Drive, Listen live to
news talks. It'd be from four pm weekdays, or follow
the podcast on iHeartRadio
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