Consents drop but turning them into houses 'still the bigger problem'

Wednesday, 2 March 2022

The number of consents issued for houses dropped in January, Stats NZ says.

Consent numbers have been at record levels in recent months, but dropped 6.3 per cent in January compared to a year earlier.

There were 2833 homes consented in the month, compared to 3025 in January 2021.

Construction statistics manager Michael Heslop said the 2021 figure was the highest for a January month on record.

“Despite the comparative fall, the 2022 figure is still the second highest for a January month in the 57-year time series.

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“We typically see fewer building consents issued in January than other months, partly due to public holidays and annual leave.”

The seasonally adjusted number of new homes consented in January 2022 fell 9.2 per cent compared with December 2021. This follows seasonally adjusted rises of 0.4 per cent in both December and November 2021.

The seasonally adjusted number of new stand-alone houses consented fell 0.4 per cent in January 2022, following a 0.4 per cent rise in December 2021.

Westpac economist Satish Ranchhod said the drop in January was probably due to normal volatility and the rate of consents being issued should remain high, on an annual basis.

In the year to January, there were consents issued for 48,707 homes, 22 per cent more than the year to January 2021.

Three regions consented record numbers of new homes in the year ended January 2022, with 5135 in Waikato (up 26 per cent compared with the year ended January 2021), 7817 in Canterbury (up 34 per cent), and 2367 in Otago (up 21 per cent). These figures are the highest number of new homes consented for any 12-month period since March 1991 when the series began.

Ranchhod said January’s drop was felt mostly in the medium-density housing category.

“There was a pull-back in consents for townhouses following a few months of very strong issuance late last year.

“While interest rates are on the rise and the housing market is starting to cool, strong house price gains in recent years are still providing a powerful incentive for developers to bring new projects to market.

“However, while consent issuance is running hot, we expect that actual building activity will rise more gradually. Shortages of labour and materials are providing a brake on the pace of building activity. We’re also seeing costs rising rapidly. “