NZ residential building consents down in September - Westpac

Satish Ranchhod, Senior Economist at Westpac, notes that New Zealand’s residential consent issuance fell 2.3% in September and while some decline was to be expected following last month’s surge, the extent of the pullback was more moderate than we had expected.

Key Quotes

“Residential consent issuance fell 2.3% in September. While some decline was to be expected following last month’s surge, the extent of the pullback was more moderate than we had expected. This reflected that there was once again a large number of apartment/multiple consents issued in September.”

“Smoothing through the month-to-month volatility, we see some interesting trends in regional consent numbers. In Auckland, where there is the greatest need for new housing, monthly consent numbers have taken a sizable step up over the past two months. Annual consent issuance remains at just over 10,000 – a level that’s still below the rate needed to keep up with population. However, if the current monthly pace were to be maintained, Auckland would finally start eating into its significant shortfall of housing. Before getting our hopes up though, it is important to remember that some of the rise in Auckland appears to be due to a couple of particularly large apartment developments, which won’t be a recurring feature. In addition, we continue to hear anecdotes about headwinds in the construction sector. Nevertheless, this is a positive development that we’ll be watching closely over the next few months.”

“Auckland isn’t the only area where consent issuance has picked up. Issuance has also been rising in Wellington, consistent with firmness in the Capital’s housing market and reports of tightness in some areas.”

“In addition, the early softening we had seen in Canterbury has now been arrested. While consent issuance is down on the levels we saw during the peak of the rebuild, they are flattening off at quite healthy levels.”

“The value of non-residential consents issuance rose 5.9% over the past year, with around $6.4b of work consented. There is a large amount of work planned over the coming years, including a large number of office buildings, commercial premises, and education buildings.”