Housing consents are at a 14-year high to make up for supply shortfall
Residential housing consents hit a 14-year high in December 2018 with 32,996 new homes consented throughout the year, according to Stats NZ.
The most recent peak was in June 2004, which saw 33,251 homes consented. The all-time record was 40,025, which happened in February 1974.
Economists say that consents have risen strongly over the past few years and are likely nearing a peak as the construction industry continues to struggle with capacity constraints – an issue which saw the government’s KiwiBuild scheme fall significantly below its first year target.
The number of homes consented rose nationally by 6.1% year on year in December 2018 with the increases driven primarily by Auckland and Wellington, which saw an increase of 18% and 19% respectively.
According to ASB senior economist Jane Turner, residential housing construction should remain ‘relatively elevated’ for the time being to allow supply to catch up with ever increasing demand. She says the housing shortage is now evident in Wellington as well as Auckland, with consents rising sharply over the last several years.
“In 2018, Auckland consents reached the highest level since the 1970’s while Wellington recorded the highest number of consents since regional records begun in 1991,” Turner stated. “Nonetheless, we expect residential construction activity to remain at high levels over 2019 in order for housing supply to make up the shortfall which has emerged in recent years.”
“Meanwhile, there are no signs of a slowdown in commercial construction despite weak business confidence levels seen over the year.”
Turner says that non-residential consent issuance has remained strong across the board, with businesses including shops, bars and restaurants, farms and social, cultural and religious buildings accounting for a large part of the consents issued. Demand for hotel and motel construction has also remained high.
