Planning rules to boost housing supply are now law, but Stats NZ figures show new home consents have tripled in recent years and experts question how much more of a building boom there can be.
A record 48,522 new homes were consented in the year to the end of November, according to the latest figures from Stats NZ. That was a 26 per cent annual increase.
In November 4688 new homes were consented nationwide, which was the highest number for any month on record. The previous record was 4490 in August.
Stats NZ construction statistics manager Michael Heslop said the Auckland region led the annual consent number with 20,384.
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That figure was up 25 per cent on the year before and was the first time the region had passed the 20,000 mark, he said.
“Much of the growth in Auckland has been due to the increase in consents for multi-unit homes such as townhouses, apartments, and flats. The number of multi-unit homes consented is now triple what it was five years ago.”
After Auckland, the regions with the highest annual number of consents were Canterbury (up 30 per cent to 7526, Waikato (up 26 per cent to 5062) and Wellington (up 22 per cent to 3633).
The number of homes consented per 1000 residents nationwide was 9.5 for the year ended November. While this rate was up from 7.6 the year before, it remained below the all-time record of 13.4 in the year to December 1973.
Building and Construction Minister Poto Williams said consent numbers had more than tripled in the last decade and the figures showed the Government was building more houses than any since the 1970s.
High levels of residential construction were expected to continue for some time, she said.
“Despite challenges caused by the pandemic, the sector has remained resilient and is now in a good place to keep this momentum going.”
A shortage of housing has made boosting supply a focus of the drive to address the housing crisis, and prompted Labour and National to join forces to pass new housing densification rules into law.
The new rules meant that, from August this year, resource consents would not be necessary for townhouses of up to three storeys with up to three dwellings on most residential sites in Auckland, Wellington, Christchurch, Tauranga, and Hamilton.
While building consents would still be required, PwC analysis suggested the new rules could lead to 105,000 new homes in those cities over the next eight years.
But experts questioned whether the changes would result in the amount of homes being suggested, especially as the current boom meant the construction industry was already struggling with capacity constraints.
Buddle Findlay partner David Allen said while the new rules potentially enabled a lot more development, in reality there could be less due to issues which could prevent them achieving what was intended.
The new rules risked delaying existing intensification processes and developments, and they did not address the provision of infrastructure needed to unlock intensification, he said.
“There are many existing residential zones with infrastructure at or near capacity, but there has been a long-standing issue with funding, and it may be challenging for councils to meet new density expectations.”
The Government had allocated billions of dollars of funding for infrastructure projects, but one-off funds were not sustainable in the long run, he said.
“There is a need to ensure that additional infrastructure will be funded, and consideration of what costs will need to be passed on to developers and ratepayers.”
Allen also said development costs would be too high for all but professional developers, particularly in a city like Wellington, and labour and material shortages would impact on them.
AUT construction professor John Tookey said consents were not difficult to get, and it was important to remember that 48,522 consents did not automatically translate to the same amount of new homes.
The issue was putting in the fundamentals necessary to drive through large-scale development, and there were natural constraints associated with this and the new densification rules, he said.
“One of these is a limit on the number of knowledgeable, experienced developers willing to undertake that sort of development.
“We are starting to see an escalation in the interest rates associated with loans and funding, and global pressure around inflation. Developers are not going to want to load up their risk profile too much under these conditions.”
Banks would also start to apply more brakes around finance, and that would affect developers’ access to funding, and the availability of buyers, he said.
This, combined with industry capacity constraints, meant the boom was unlikely to continue at the current level for long.
“But you don’t want a scenario where no-one applies the brakes, and you are left with unfinished housing development all over the show as happened in Ireland and Spain.”