Building industry could be heading for a breather as dwelling consent numbers decline
By Greg Ninness
The residential building boom looks like it's starting to wane, with the number of new dwellings being consented falling below where it was a year earlier, for three consecutive months.
The latest figures from Statistics NZ show 3457 new dwellings were consented in December last year, down 16.3% compared to December 2021.
The December 2022 figure was also 7.8% lower than December 2020 figure. And it was the third consecutive month that the number of new dwellings was lower than the same month a year earlier.
The quarterly figures also suggest the number of new homes being consented may be at the start of a longer term decline.
They show that when compared to the same quarter a year earlier, the number of new dwelling consents being issued continued to increase significantly up until the first quarter of last year, then flattened off in the second and third quarters before declining in the fourth quarter.
The decline in dwelling consents is most apparent in the Auckland region, where 4852 new dwellings were consented in the fourth quarter of 2022.
That was down 12.4% compared to the fourth quarter of 2021, and was the first time dwelling consents in the region had been below 5000 since the first quarter of 2021.
Fourth quarter dwelling consents were also down significantly compared to a year earlier in Waikato, Bay of Plenty and Otago, although they remained at elevated levels in the Wellington Region and Canterbury.
A downturn in the number of new dwellings being built could have serious economic consequences because the residential construction industry is both a major employer and contributor towards Gross Domestic Product.
The estimated total value of building work (excluding land) for the new residential consents issued in the fourth quarter of 2022 was $4.82 billion, down by $219 million year-on-year.
That's a significant decline, given that the construction industry is facing major inflationary pressures.
However it may take several months for a reduction in building work to be felt, because it typically takes around two years from the time a dwelling is consented until it is completed and ready for occupation.
In the meantime, the building industry in Auckland and other parts of the country severely affected by recent flooding could get a boost as damaged homes are repaired or rebuilt.
This story was originally published on Interest.co.nz and has been republished here with permission.
