Low building consents figure a bad omen for first-time home owners

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The latest building consents statistics for December 2007 are another indication of New Zealand’s deepening housing affordability crisis, Registered Master Builders Federation chief executive Pieter Burghout says.

The figures indicate that the residential market is softening considerably in terms of new homes being built, while the commercial market is staying relatively strong.
The 1738 building consents for new houses issued in December 2007 was the lowest December figure since 2001, although the 25,544 consents issued for all of 2007 was similar to the totals for 2005 and 2006.

“The Reserve Bank’s efforts to dampen down the housing market are clearly working, with fewer houses being sold, and fewer houses being built,” Mr Burghout says.

Exacerbating the crisis

“However, this could exacerbate the housing affordability crisis — as the supply of new housing dries up, house prices will rise. This is not what people trying to get into the housing market will want to see happen,” he says.

“New Zealand needs to be building more than 30,000 houses a year, not 25,000, and such an increase in the supply of new homes would be a major factor in making housing more affordable.”

Unprecedented $12 billion
The value of new consents issued for residential and commercial building was just shy of hitting an unprecedented $12 billion for the year — at $11,938 million — showing how significant an economic driver the construction industry is for New Zealand.

Mr Burghout says he expects the number of new residential building consents for 2008 to be roughly similar to last year, or down by about 1000.
“We are expecting a slightly softening residential market, a steady, if not slightly stronger, commercial market, and a very strong infrastructure market.
So 2008 will still be a busy year for Registered Master Builders.”

Mr Burghout is forecasting an upturn in the industry in 2009, particularly in the residential market.