Strong growth in multi-unit dwelling consents

The number of dwelling consents being issued just keeps going up, with September seeing the highest number in any 12-month period since the year to October 1974.

Thursday, October 31st 2019, 5:03PM

by Miriam Bell

There were 3,347 new consents issued nationwide in September, which was an increase of 30.8% as compared to September 2018, according to Statistics NZ’s latest data.

In monthly terms, once seasonally adjusted, the number of new consents was up by 7.2% in September, following a 0.9% rise in August 2019.

The total number of new dwellings consents in the year ending September 2019 was 36,446, which was up by 12.0% from September last year.

While this is the highest since the October 1974 year, it is still below the record 40,025 new homes consented in the February 1974 year.

Stats NZ construction statistics manager Melissa McKenzie says that growth in the number of multi-unit or high-density dwellings helped push up the consents numbers.

The number of multi-unit dwellings consented grew 22% in the September 2019 year, reaching 14,492 consented – and this growth outpaced that of stand-alone houses, which rose by 6.1% between the last two September years.

McKenzie says stand-alone houses still dominate the New Zealand market for new builds, but the gap between stand-alone houses and multi-unit dwellings consented has been getting smaller.

“In the September 2019 year, 40% of all homes consented were apartments, townhouses, flats, units, or retirement village units, compared with a low point of about 15% in 2010.”

The rise in consents for multi-unit homes is driven by more activity in Auckland, with over 1,000 more multi-unit homes consented there in the past 12 months than in the previous year, she says.

“But more multi-unit homes have been consented in other regions too and are becoming more common in many parts of New Zealand.”

ASB senior economist Chris Tennent-Brown says that residential dwelling consent issuance has held up at very high levels as house building demand remains strong across New Zealand.

A big step up in high-density home consenting is a key part of the story and the details within the September figures show the strong demand for high-density dwellings, he says.

“We believe housing construction is close to a peak but expect consent issuance to remain elevated over the coming year or so in order for housing supply to make up the short-fall which appears to have emerged in a number of regions over recent years.

“Early signs of a summer lift in house sales bode well for future construction activity too. Record-low mortgage interest rates are expected to play a part in a pick-up in the residential market this summer.”

Westpac senior economist Satish Ranchhod agrees. He says they expect that the current strength in construction activity will continue through 2020, and the Stats NZ data supports that forecast.

“But while we’ll need a large number of additional dwellings over the coming years, beyond 2020 we don’t expect to see the sort of large increases in annual building activity that we’ve seen in recent years.”

With large increases in construction activity over the past year, consent numbers are now more commensurate with changes in the population - even in Auckland, where population growth has been particularly strong, he says.

“At the same time, population growth has started to slow as net migration has eased back, and we expect this to continue over the next few years. That will naturally cap the number of homes required.”

Tags: Auckland building consents construction housing market housing shortage interest rates population growth property investment property values real estate supply Westpac