A substantial rise in the number of consented Auckland building projects not proceeding is likely

By Greg Ninness

A significant increase in the number of consented housing projects in Auckland that do not get built over the next couple of years is possible.

Most residential building projects take about two years to complete once a building consent is issued. Comparing the number of Code Compliance Certificates issued for new dwellings in Auckland with the number of new residential building consents issued two years previously, shows their numbers are very similar, suggesting very few projects are not completed.

That suggests building consents have been a very good indicator of future building activity.

Code Compliance Certificates are issued when a building is completed, making them a reliable indicator of new housing supply.

However the two sets of figures may be about to take divergent paths.

The graph below shows the number of Code Compliance Certificates (CCCs) issued by Auckland Council (the heavy blue line) every month between January 2015 and April 2023, compared to the number new residential dwelling consents issued two years previously.

The thin blue line is the trend for CCCs.

Both data sets are actual quantities, not estimates.

What the graph shows is the number of new homes built in Auckland has risen steadily over the last few years, in line with the steady increase in building consents, and it will need to keep increasing if completions are to keep pace with consents.

If that does happen, then Auckland's residential building boom is yet to peak, and it could increase by several hundred more homes a month to complete all of the projects that have been consented.

While that is a possibility, it seems unlikely because the overall housing market is in the doldrums and residential building consents have started trending down, indicating a weakening in developers' intentions.

The thin blue line in the graph shows the trend in new dwelling completions, projected forward from April 2023 to match up with dwelling consents issued over the previous two years.

What that suggests is even if the number of new homes being completed in Auckland continues to increase at the current rate, there will still be a substantial shortfall between consents and completions.

If the number of new dwelling completions declines or remains static, the shortfall will be even bigger.

Which suggests we are likely to start seeing a significant number of consented building projects in Auckland being put on hold.

This story was originally published on Interest.co.nz and has been republished here with permission.