NZ residential building consents down slightly in July - Westpac

New Zealand’s residential building consent issuance fell 0.7% in July, following a 1.3% fall last month while over the past year, New Zealand consented around 30,400 new dwellings, notes Satish Ranchhod, Senior Economist at Westpac.

Key Quotes

“The slight pullback in total consents in July masked some very different trends in the main centres. Dwelling consent numbers in Auckland fell sharply, mostly due to a fall in multiples consents (such as apartments and medium-density housing). Over the past year, just over 10,000 new dwellings were consented in the region.”

“Issuance in Auckland has flatlined over the past year, and remains below the levels needed to keep up with population growth. As we emphasised in our latest quarterly Economic Overview, the construction sector upturn has run into some roadblocks from capacity constraints, rising cost pressures and tighter credit conditions. Pre-election uncertainty may also be having some dampening impact.”

“While we wouldn’t want to read too much into a single month of data, the July performance is consistent with our view. We anticipate a period of subdued construction growth as a result of these constraints, though there is still a large pipeline of planned work.”

“In contrast, there was a sharp rise in dwelling consent numbers in Canterbury in July. However, this is likely to be a temporary rise, with post-earthquake reconstruction continuing its gradual wind-down.”

“The value of non-residential consents issued rose 2% over the past year, with around $6.2b of work consented. There is a large amount of work planned over the coming years. However, at least for now, we are seeing some signs that non-residential construction activity is levelling off.”