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New Dwelling Consents Show Slowing Decline
In recent data released by Stats NZ, the number of new dwelling consents in New Zealand showed a continued decline, although the pace of this decline appears to be moderating. In May, the seasonally adjusted number of new dwellings consented fell by 1.7%, following a 2.1% decrease in April.
Key Statistics
-Yearly Comparison: From the year ending May 31, the actual number of new dwellings consented was 34,851, marking a significant 23% drop from the previous year.
Consents per Capita: The number of new dwellings consented per 1000 residents decreased to 6.6, down from 8.7 a year earlier.
Monthly Breakdown: In May alone, 3175 new dwellings were consented, comprising 1555 stand-alone houses, 1424 townhouses, flats, and units, 109 apartments, and 87 retirement village units.
Analysis and Outlook
Westpac senior economist Satish Ranchhod commented on the data, noting that while residential consent issuance has continued to decline, there are signs that it may be stabilizing. Ranchhod attributed the downturn to challenging conditions in New Zealand’s building sector, including rising construction and financing costs, coupled with softness in the housing market impacting new home prices.
Ranchhod expressed cautious optimism that consents for stand-alone houses have maintained stability for over six months, while the decline in multi-unit developments like townhouses has leveled off. However, he warned that with interest rates expected to remain high in the near future, any recovery in the housing market or consent issuance is unlikely in the short term.
Regional Variances
The regional data showed varying impacts:
- Auckland: Down 26% in new dwelling consents.
- Waikato: Down 25%.
- Wellington: Down 36%.
- Rest of North Island: Down 18%.
- South Island: Canterbury down 15%, elsewhere down 17%.
Non-Residential Building Activity
In addition to residential data, Stats NZ reported a 7% decrease in the annual value of non-residential building work consented, amounting to $9.2 billion.
Market Implications
The release of these statistics coincided with forecasts suggesting that house prices may need to decrease further to achieve affordability targets, with prices currently 15.9% lower than their 2021 peak.
In conclusion, while the decline in new dwelling consents persists, signs of stabilization in certain segments offer cautious hope amidst broader economic challenges.