Residential building consents

Consents bounce back to their higher normal

31 Mar 2022
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Brad Olsen

Our take on the latest Residential building consents (Thu 31 Mar 2022)

Monthly consents rose 10% (sa) in Feb
Townhouse consents growth accelerated to 46%pa over the year to Feb 2022
Monthly consents look to plateau at around 4,200 (sa)

The key numbers...

  • Residential consents bounced back strongly from January’s unexpectedly weak result, rising 10% (seasonally adjusted), more than erasing January’s 8.7% drop. The 4,195 consents issued in February was up 34%pa from February 2021.
  • Annual consents have risen to 49,773 and would require 4,445 consents in March 2022 to crack the 50,000pa mark. That result would be the fourth-highest monthly total recorded but is definitely achievable.
  • Townhouses drove the resumption in consent strength, rising by 108%pa to 1,842 consents in February, the second-highest monthly total on record. Monthly Auckland townhouse consents nearly doubled, and Canterbury consents hit 385, the highest monthly total ever for townhouses in the region.
  • Retirement unit consents are regaining momentum, with annual consents up 64%pa after a subdued period at the start of COVID-19. Standalone house growth remains more muted, up just 0.3%pa in February, and down 2.6%pa on a year-end basis. The trend for apartments is even more subdued, down 0.5%pa on a year-end basis.

Monthly consents plateau around 4,200

Monthly dwelling consents, seasonally adjusted
4180

...and our reaction

  • Building consents in February reversed January’s fall and moved back in line with the high level of consents observed throughout 2021. Consents do appear to have plateaued at about 4,200 per month on average.
  • The shift towards denser dwellings continues, with townhouses leading the charge. Standalone house consents are still rising – just. But standalone houses’ share of the market is being squeezed as development plans increasingly favour attached dwellings that have smaller land requirements and are more affordable.
  • We expect momentum in consents will pull back in 2022, as supply constraints, labour pressures, rising costs, and concerns over future profitability see fewer new projects being progressed.
  • The housing market appears to be turning faster than first expected, given rapidly rising mortgage rates, more limited credit availability, and high inflation biting into household spending and saving. A change in house price expectations means developers won’t be able to make the same return as they’d have previously been expecting.

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