Residential building consents

Weak house numbers drive decline in residential consents

1 Aug 2022
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Joel Glynn

Our take on the latest Residential building consents (Mon 1 Aug 2022)

Annual dwelling consents
50,736
As of June 2022
House consents down 26% from June 2021
Non-house consents up 18% from June 2021

The key numbers...

  • Monthly dwelling consents declined 6.5% in June, compared to June 2021, but the annual total remained over 50,000 for the fourth consecutive month.
  • The decline was driven by weak house consents, which fell 26% from June 2021. However, falling numbers of consents for apartments and retirement units (down 30% and 27% from June 2021 respectively) also contributed to the decline.
  • Townhouses were up 40% from June 2021, and with townhouses making up 80% of all attached dwelling consents in June, total attached dwelling consents were still up 18%pa.
  • Consent numbers were weak across several areas of the provincial North Island, with declines in Bay of Plenty (20%pa), Manawatū-Whanganui (16%pa), and Northland (16%pa) for June quarter. However, the largest fall in the last quarter was in Nelson, where new consents declined 26%pa.
  • Auckland and Canterbury were the strongest growth areas regions for new dwelling consents over the last year, contributing 40% and 33% respectively to the change in annual consents. Wellington made a smaller contribution of 11% to growth in the annual total of new dwelling consents.

House consents soften, townhouse strength unaffected

New dwelling consents, annual running totals
4319

...and our reaction

  • Strong townhouse consents and weak consents for standalone houses were as expected in June, with purchasers favouring more affordable, higher-density housing. This trend has driven strong townhouse consents growth over the last 4½ years, but is now also weakening demand for standalone houses.
  • The weakness in consent numbers was widespread in June, with monthly new consents down across 13 of 16 regions compared to June 2021. Canterbury continues to be one of the stronger regions, with consents up by 15%pa in June, as 99 more consents were issued compared to a year ago.
  • Interest rates continue to rise, with the official cash rate lifted by 50 basis points again in July. Residential building cost inflation of 18%pa in June also means that the construction of new dwellings is now significantly more expensive than it was this time last year, which is reflected in the declining consent totals.

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