Residential building consents

Annual dwelling consent decline accelerates in July

30 Aug 2023
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Brad Olsen

Our take on the latest Residential building consents (Wed 30 Aug 2023)

Annual dwelling consents
43,487
As of July 2023
Total new dwelling consents down 14% over year to July
Annual townhouse consent decline accelerates to 11%pa

The key numbers...

  • Dwelling consents maintained their downward trajectory in July, easing 5.2% from June on a seasonally adjusted basis. Annual consents have now fallen to 15% below their mid-2022 peak, but are still sitting more than 20% above pre-pandemic (2019) levels.
  • Standalone houses continue to be the central driver of falling annual consents, easing 23%pa over the July 2023 year. Townhouse consents fell 11%pa, the steepest annual decline for this building type in over a decade.
  • Annual retirement consents continue to tick up, driven by higher consent volumes in Northland, Auckland, and Waikato. 
  • The number of regions where dwelling consents are still growing on an annual basis was knocked down from four in June to three in July: Gisborne, Nelson, and Marlborough. Retirement units continued to support higher annual consents in Nelson and Marlborough, although the vast majority of this consenting took place in early 2023 and has since slowed on a monthly basis. Townhouse consents have remained elevated over the last few months in all three regions.

Consents elevated but heading down

Dwelling consents, annual running totals
4670

...and our reaction

  • The 14%pa decline in total dwelling consents over the July 2023 year represents an acceleration in the downwards momentum for residential building intentions. Although house prices are beginning to lift from a bottom, prices are still down on higher levels amid higher building costs, making it a more difficult proposition to achieve expected returns on new dwellings.
  • Combined with higher debt-servicing costs, there are continued barriers which will mean building intentions are set to weaken further and remain subdued for the foreseeable future.
  • The declining level of townhouse consents reflects the overall decline in building intentions. Townhouses have generally grown their share of total consents since 2021, but have softened slightly since April 2023, signalling that even the relatively more affordable option is becoming less attractive given wider pressures.
  • Strong population growth, bolstered by the recent migration influx, and still-high house prices relative to history are likely to keep consenting above pre-pandemic levels even as poor economic conditions persist. We continue to expect residential building consents to bottom out at an annual rate of just above 30,000pa by 2026.

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