Non-residential building consents
Private sector consents soften further in September
31 Oct 2023
Our take on the latest Non-residential building consents (Tue 31 Oct 2023)
Value of non-res consents
$659m
In September 2023
Real value of consents down 26% from September 2022
Private consents down 13%pa over three months to September
The key numbers...
- The value of non-residential building consents in September fell slightly from August, down 1.5% after stripping out seasonal effects. This result brought the annual decline over the three months to September, adjusted for building cost inflation, to 17%pa – the largest decline since mid-2020 lockdown.
- Office consents were up $67m from September 2022, supported by a $27m consent in Tauranga. However, the general trajectory remains weak with office consents still down $140m over the last three months from the same quarter last year.
- There were also large annual declines over the three months to September in nationwide hospital (-$125m) and education consents (-$51m). Public consents recorded their first three-month annual decline (-7%pa) since February this year.
- Consent totals remained buoyant in Canterbury, up $41m from September 2022, but fell significantly in Auckland (-$145m), Waikato (-$68m), Manawatū-Whanganui (-$17m), and Otago (-$14m).
Momentum coming out of both public and private work
Annual running total, $m
...and our reaction
- Continued weakness in September provided further evidence that tight credit conditions and high interest rates are dampening confidence in non-residential building. Private sector activity declined on an annual basis for a second consecutive month, which could signal a shift in trend across the private sector that we expect to continue into 2024.
- Weaker private sector work was reflected by retail, factory, and hotel building types recording their first three-month annual declines in several months.
- Softening hospital and education consents are likely to be occurring as initial large consents from a year ago are not repeated. However, consent values for these building types remain significantly above their pre-pandemic levels, and there are certain to be more hospital consents in coming quarters.
- Although total public sector consents are likely to come down from their peak, we still expect public sector work to support overall non-residential activity during 2024.
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