NZ: Building consents witnessed quake-related drop in November - ANZ

Phil Borkin, Senior Economist at ANZ, notes that the NZ’s total residential consent issuance plunged in November.

Key Quotes

“However, this fall appears largely confined to the Wellington region, where we have been informed that due to the earthquake, there were challenges processing consents in the month. While capacity and capital constraints are capping the upside for consent issuance, we view this sharp drop in November as something of an aberration.”

“Key Points

• The number of dwelling consents issued plunged 9.2% m/m in November after a revised 2.0% increase the previous month. Looking through the noise, in three-month annualised terms, total issuance is still running at a decent 31K pace. 
• From a regional perspective, it appears much of the weakness in November was related to the Wellington region. We estimate that the number of Wellington consents fell 29% m/m in seasonally adjusted terms.
• In trend terms, national consent issuance is flattening (although plenty of caution is needed given end-point problems with these types of measures). A softening is not overly surprising given the industry is increasingly facing capacity and capital constraints.
• The value of non-residential consents remains strong. While the $393m seasonally adjusted amount is weaker than the previous month and the softest since July 2015, issuance is lumpy and volatile. It is still growing at a 0.5% m/m pace in trend terms. 
• Given capacity pressures, construction costs continue to rise. The value of consents per square metre is trending higher, rising 8.2% y/y (3month average) in November.”