New Home Consents Plummet in 2023 Following Record 2022 Figures, Amid Rising Construction Costs

Date Published: 3 February 2024

Key Facts

• Applications to build new homes in New Zealand have seen a significant decrease off a record-setting year.
• According to Stats NZ, the number of new homes consented in 2023 dropped by a quarter to 37,239.
• In 2022, nearly 50,000 new homes were approved, marking it a record-setting year for new home consents.
• Brad Olsen, principal economist at Infometrics, states that residential construction remains above pre-pandemic levels despite the drop.
• Higher construction costs, increased interest rates, and a dip in house prices have influenced the decrease in new home consents. Construction of a residential house now costs 41% more than it did pre-pandemic.
• Builders are finding it increasingly difficult to secure future work.

Article Summary

New Zealand has experienced a notable decrease in new home consent applications, according to senior economist Brad Olsen. The latest figures released by Stats NZ reveal a quarter decrease in new homes consented in 2023, with a total of 37,239. This decrease follows a record-setting year in 2022 where nearly 50,000 new home consents were approved, the highest in any calendar year.

While the drop is significant, Olsen, an economist at Infometrics, pointed out that residential construction remains higher than pre-pandemic levels. This is despite economic challenges impacting the property and construction markets. Increased interest rates and a fall in house prices have contributed to a more difficult financing environment for buyers and builders.

Additionally, the cost of building residential homes has risen dramatically. Costs are now 41% higher than they were pre-pandemic, posing a significant challenge for the industry. As a result, builders are now finding it harder to secure future work, indicating a potential slowing pace in the residential construction sector.

Source Link: To read the full article, click here.