Residential building consents

Construction market stretched as consents rise further

1 Jul 2021
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Brad Olsen

Our take on the latest Residential building consents (Thu 1 Jul 2021)

43,466
Residential consents in the year to May 2021
Townhouse consents up 49%pa over the last 12 months
Alterations consent values up 11%pa over the last 12 months

The key numbers...

  • Growth in residential consents continues unabated, with an additional 4,180 consents in May pushing the annual total to 43,466. Even accounting for last year’s lockdown, May 2021 was strong, with consents up 12% from May 2019.
  • Townhouses are a firm driver of this sustained rise in consents, with a record 1,380 consents in May taking annual townhouse consents to nearly 13,300 (up 49%pa).
  • May 2021 saw Waikato Region record its largest monthly total of 525 dwelling consents, with strong growth in Auckland and Canterbury as well.
  • The value of alterations consents has also been steadily climbing and, with the annual total reaching $2.14b, is now 11% higher than the year to May 2020.

Alterations continue to rise

$b, annual consented value of alterations
3948

...and our reaction

  • Momentum in the building industry is continuing to rise, with high volumes of consents over the last 12 months pushing capacity to its limit. We expect that actual building activity is below what consents suggest, simply due to stretched access to materials and workers.
  • Higher levels of building activity have pushed construction employment above 190,000 according to the latest monthly employment data. Job numbers have risen across most of the country, particularly in Waikato and Auckland.
  • Sustained consent growth points towards a healthy pipeline of construction work over the next two years, with increased medium-density housing remaining an important trend. As councils implement the government’s latest National Policy Statement on Urban Development, we expect this focus on medium density to persist, possibly at higher levels than anticipated.
  • Strong alterations consents over the last year reiterate the focus from households on improving their home environment. We have also seen higher spending hardware and DIY materials, due to spare money from overseas travel funds and savings during Level 4 lockdown, low interest rates, and higher house prices.

     

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