Non-residential building consents
Strong cost pressures not stopping non-res growth
31 May 2022
Our take on the latest Non-residential building consents (Tue 31 May 2022)
Value of non-res consents
$578m
As of April 2022
Real non-res consents grew an estimated 3.4%pa in April
Hospital consents down 23%pa in three months to April
The key numbers...
- Non-residential consents were up 6.3%pa in April, valued at $578m. Consents were down 25% (seasonally adjusted) from the previous month, but March had been an exceptionally strong result.
- The annual consent total in April was up 11% from the previous 12 months. Much of this growth has been driven by cost increases, with non-residential cost inflation hitting a 35-year high of 10%pa in the March quarter. After stripping out cost inflation, we estimate that real non-residential consents in the year to April were up 3.4%pa.
- The strongest build types over the last year included hospitals, factories, and warehouses, which were up by an average of 36%, 22%, and 21%pa respectively in the year to April. Despite this strength, hospital consents have eased in recent months, down by 23% in the three months April from a year earlier.
- Waikato recorded its strongest monthly result since July 2020, with consents in the region $32m higher than in April 2021, boosted by a $30m office consent as part of the Union Square development in Hamilton. The region’s consent growth in the three months was 28%pa.
- Auckland and Wellington consents increased 79%pa and 47%pa respectively in the three months to April, while Christchurch values fell 32%pa.
Strong cost pressures not stopping non-res growth
Non-residential consent values ($m), year-end annual % change
...and our reaction
- Growth in non-residential consent values remained solid in April, as the annual total reached $8.5b. However, growth in non-residential activity is being inflated by the significant cost pressures the sector faces.
- Real consent values are still up 3.4% over the last year, and have increased 8.8%pa in the last three months, suggesting real non-residential activity is growing despite the huge cost pressures.
- Hospital consents have become a growth area over the last 12-18 months, boosted by major projects in Auckland and Taranaki, and with the focus on hospital infrastructure intensified by huge Delta and Omicron outbreaks overseas. Hospital consents have eased in the last three months, down 23%pa.
- We expect hospital consents will return to strong growth, as the pipeline for hospital consents has firm support in Budget 2022. Dunedin Hospital’s redevelopment is currently the largest project in the pipeline, worth over $1.5b. Budget 2022 also prioritises construction projects at Nelson, Whangarei, and Hillmorton Hospitals.
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