Big drop in building consent numbers suggests the construction industry is headed for a sharp downturn
By Greg Ninness
The pending slowdown in residential construction appears to be gathering pace, with a big drop in the number of new homes being consented.
The latest figures from Statistics NZ show that 3970 new dwellings were consented in March, down 25.1% compared to March last year.
March was the fifth consecutive month that the number of new dwellings consented has been less than it was in the same month a year earlier.
In the 12 months to March this year, 46,924 new dwellings were consented, down 7.9% compared to the previous 12 months.
The biggest decline on an annual basis has been in stand alone houses, with 19,668 consented in the year to March 2023, down 22.6% compared to the previous 12 months.
The number of apartments consented in the year to March was down 2% compared to a year earlier, while retirement village units were up 14.2% and townhouses and home units were up 7.5% (see the second chart below for the monthly trends by dwelling type).
However, high inflation in the building industry meant the total value of building work consented for new dwellings in the year to March was barely changed, at $19.65 billion, down just 0.3% compared to the previous 12 months.
The slowdown in residential construction is also evident in most regions.
The only regions where the number of new dwellings consented in the year to March was higher than it was in the previous 12 months, were Tasman +18.8%, Marlborough +35.2% and West Coast +6.5%.
In the main population centres, annual new dwelling consents in Auckland were -5.4%, Waikato -13.9%, Bay of Plenty -24.3%, Wellington -6.0%, Canterbury --4.5% and Otago -12.8%.
The biggest annual decline of -29.7% was in Taranaki (see the first chart below for the full regional monthly trends).
The decline in building activity also appears to be affecting commercial and other non-residential construction.
The non-residential construction industry, which includes a wide variety of buildings from factories, shops and offices to schools and hospitals, also appears to be slowing.
The total floor area of non-residential buildings consented in March was down 24.7% compared to March last year and in the year to March was down 12.4% compared to the previous 12 months.
The persistent and increasing reduction in dwellings being consented means companies operating in the residential construction and supplies market will be starting to notice the downturn in work as existing projects come to completion.
It appears that the the construction boom that has been a mainstay of the economy over the last few years is now coming to an end.
This story was originally published on Interest.co.nz and has been republished here with permission.