The number of new dwellings consented last year is well down from the highs of 2022, and economists predict the cycle has reached its floor.
The downturn in residential development looks like it has found a floor, but it appears a turnaround is still a way off, according to the latest building consent figures.
Over the past year, 33,600 new dwellings were consented, well down from the lofty highs New Zealand saw in 2022.
Residential consent numbers (November month): +5.3%, previous: -5.2%
Residential consent numbers (12 months to November): -12.0%, previous: -16.1%
Non-residential consent values (12 months to November): -1.6%, previous: -3.5%
Non-residential amount of floor space consented (12 months to Oct November): -18.2%, previous: -18.7%
Westpac Senior Economist Satish Ranchhod interprets the figures by saying, “While there has been a stark slowdown in new home construction over the past few years, the development cycle now looks like it has found a floor.
“Over time, we expect those cuts will support a gradual recovery in the housing market and house prices,” says Ranchhod. “And that combination of lower borrowing costs and a strengthening in the housing market will eventually be supportive of new housing development.
“However, it will take time for the full impact of lower borrowing costs to be felt. We don’t expect to see consent issuance turning materially higher until mid-2025, with a lift in construction activity to follow that.”
On the commercial front, the amount of non-residential work being consented remains down on last year. Developers and owner-occupiers are still cautious about significant capital expenditure, with particular softness in the retail space, Ranchhod suggests.
“Even so we’re continuing to see a reasonable amount of work in the industrial/storage segment. We’re also seeing continued development and refurbishment of office space.”
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