Non-residential building consents
Downward pressure on non-res consents continues
2 Feb 2024
Our take on the latest Non-residential building consents (Fri 2 Feb 2024)
Series name
$647m
In Dec 2023
Public sector consents down 54% from Dec 2022 quarter
Private sector consents down 24%pa for Dec 2022 month
The key numbers...
- Non-residential consents totalled $647m in December, down 24% from a year ago. After adjusting for seasonal patterns and building cost inflation, the monthly consent total was the weakest since January 2023 and continues a definite trend of weakening in the second half of last year.
- The biggest contributor to December’s decline from a year earlier was hospital consents (down $131m), with smaller falls in warehouses ($47m), hotels ($37m), and social, cultural, and religious buildings ($24m). The hospital and social results are reflective of consistently weaker figures for these building types over the last few months.
- The fall in hospital building was driven by a $78m decline in consents in Christchurch and a $38m fall in Waipā. Warehouse consents dropped by $24m in Māngere-Ōtāhuhu and $14m in Hamilton. The central Auckland area of Waitematā recorded a $32m fall in hotel consents, while Queenstown-Lakes saw a $42m decline in social building.
- We estimate that year-end growth in the volume of consents, after correcting for building cost inflation, is now at a three-year low of -7.4%.
Consents have clearly turned downwards
Annual running totals, $m (2009/10 $m)
...and our reaction
- Today’s weak result leaves non-residential consents for the December quarter about $104m, or 4.6%, below the estimate published today in our February Building Forecasts. With Stats NZ data indicating that non-residential work put in place has already peaked, we are increasingly confident of our sharp forecast decline in activity during this year.
- The sharp fall in public sector consents over the last quarter reflects a combination of both timing and fewer projects coming through. In fact, education consents were one of the few building types to significantly outperform our expectations for the quarter, with hospital and social consents close to forecast.
- The softening in private sector activity is less consistent on a month-to-month basis. However, storage and accommodation building results were clearly weaker than expected for the quarter, with smaller underperformances by office and farm building. The December monthly result for warehouse consents was the lowest inflation-adjusted total since January 2021, while farm consents have not recorded a weaker monthly result since 2000!
- We expect non-residential consents to remain under downward pressure throughout the first half of this year, with private sector caution accompanied by reduced government spending (except for hospital building). A strengthening economic outlook and gradual reductions in interest rates are likely to see consents stabilise and possibly start to improve in the latter part of 2024.
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