January building slowdown causes concern
Economists have expressed concern about the latest building consent figures which indicate building work is stalling.
Statistics New Zealand said that on a seasonally adjusted basis, new home consents rose a modest 0.8 per cent in January, following declines in the previous two months.
Although consents were up 11 per cent rise annually, the trend had declined by 15 per cent in the five months to January, after reaching a 12 year high in August.
The biggest fall-off was in Canterbury, where the housing market is now back in balance, but most regions were down.
Auckland building consents were coasting at just over 10,000 homes a year, when the figure needed to be about 11,000 to meet population growth, .Westpac's Satish Ranchhod said.
"And even then, it will require around a decade of strong building activity," he said.
ASB's Jane Turner said the slowdown in Auckland housing consent growth was "concerning given existing supply shortages".
Infometrics' Hillary Parker said Auckland consent levels were only just above levels of a year ago.
"It seems that the requirement for a 40 per cent deposit for investment property has shut many investors out of the market in Auckland, hitting apparent demand for existing dwellings and making building new dwellings less financially viable."
Rising interest rates meant banks were also becoming warier of lending for large projects such as apartment buildings.
And a lack of enough skilled workers in the construction industry was pushing up the cost to build.
One bright spot was Wellington, where building consents picked up 10 per cent in January. Consents for standalone houses had recovered from the November quake, and townhouse consents were also growing.
"However, building levels in the region remain low and we are seeing increasing signs of tightness in the regional housing market," Ranchhod said.
January's figures were not reflected in the December quarter building activity figures which came out positively last week.
The number of building projects "put in place" were up 1.9 per cent in the December quarter, and 14.5 per cent higher over the past year.
There were gains in both residential and non-residential building activity, particularly in Auckland and Wellington while Canterbury eased back.
For Auckland, residential consents were growing 30 per cent annually but that still fell short of expectations, Infometrics' Mieke Welvaert said.
Fortunately a broad-based lift in non-residential building work had "more than offset the slightly lacking residential building result".