Non-residential building consents
Non-res consents revert to weakening trend
1 Nov 2024
Our take on the latest Non-residential building consents (Fri 1 Nov 2024)
Value of non-res consents
$644m
In September 2024
Just $59m of office consents in September
Hostel consents total $83m in September
The key numbers...
- After a stronger month in August, non-residential consents weakened again in September, with the $644m of consents down 2.2% from September 2023.
- The biggest negative contributor in September was office building, which followed up August’s buoyant result with a 56% decline in the value of consents from September 2023. After adjusting for building cost inflation, the latest figure was the weakest month for office consents since January 2022. The biggest falls were recorded in Tauranga (down $28m) and Māngere-Ōtāhuhu (down $27m).
- Other sizable falls from a year ago came from storage building (down $52m, with declines across much of Auckland and in Wellington), hospitals (down $23m), and education buildings (down $20m).
- Bucking the trend of weakness was $83m of hostel consents, with the bulk of this total likely to be related to work at Auckland’s Lorne Street student accommodation.
- Other areas of strength included $28m of hospital consents in Selwyn and $24m of storage consents in Hastings.
Non-residential consents are falling in most regions
Value of non-residential consents, year-end % change, September 2024
...and our reaction
- The strong hostel result took total accommodation consents for the September quarter to $143m, well above our forecast. However, this buoyant result was outweighed by weak finishes to the quarter for offices ($150m below forecast), factories ($67m below forecast), and education buildings ($56m below forecast).
- As a result, total non-residential consents for the September quarter were $172m below forecast. The value of consents for the quarter was up 2.1% from a year earlier, but growth was only in positive territory due to an unusually strong month for offices in August.
- Activity appears to be particularly under pressure throughout much of the middle of the North Island, with consents in Waikato, Bay of Plenty, Gisborne, and Hawke’s Bay running over the last quarter running below the nationwide trend. Consents in Otago and Southland are also showing signs of tapering off.
- There are enough planned projects in the pipeline to lead to a temporary rally in consents in the final quarter of 2024. However, we expect further falls in consents throughout 2025 as construction activity responds to tough economic conditions and reduced demand for space.
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