Non-residential building consents
Annual non-residential consent values falling
12 Jan 2024
Our take on the latest Non-residential building consents (Fri 12 Jan 2024)
Value of non-res consents
$762m
As of November 2023
Annual level of public consents down 5.8%pa
Annual new non-res consent value down 2.3%pa
The key numbers...
- The value of non-residential building consents totalled $762m in November 2023, down 8.1% from November 2022 – the fourth month in a row of annual declines.
- Overall, the consented value of non-residential buildings over the last 12 months is just 2.0% higher than a year earlier – comprised of a 17% lift in alterations and additions work, but also a 2.3% fall in new non-residential building consent values. Higher building costs means that the expected volume of consents is 5% lower than a year ago.
- The annual value of public non-residential consents over the 12 months to November was 5.8% lower than a year earlier.
- Consented work over the last three months is lower than a year ago across most building types, with education and hospital consented values down the most (both down 42%pa). Warehousing investment has headed higher, with an 18%pa rise in storage consents over the same period. Offices and hotels were the other building types to record rises.
A continued fall in non-residential intentions
Annual running total ($b), adjusted for building-cost inflation
...and our reaction
- The outlook for non-residential construction activity continues to soften as expected, as factors including higher interest rates and higher building costs limit appetite for further investment. Annual consented activity, once building cost hikes have been factored in, is now down 5% and at its lowest since September 2021.
- Falling public consent values compared to a year ago is due to higher consenting in recent years now falling away, particularly for hospital projects, education projects, and transport projects with building structures like the Auckland City Rail Link.
- Private sector activity in the last couple of months has remained stronger than we had originally expected, with stronger investments in storage/warehousing buildings and more investment in offices recently helping to buoy consents.
- But with new non-residential consent values already declining, and overall non-residential consented values showing slower growth than before, and most building types showing lower building intentions than a year ago, the downwards pathway for non-residential consent appears clear.
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