Dwelling consents issued

IBISWorld forecasts the number of dwelling consents issued to plunge by 3.0% in 2024-25, to a total of 34,190 units. This trend highlights a slowdown in incentivising and elevating construction activity. The high interest rate will heavily weigh on dwelling consents issued. In addition, rising build costs have increased construction project hesitancy, resulting in declining dwelling consents issued. However, the New Zealand Government is committing to ease the housing crisis and boost the supply of affordable housing. This will likely limit declines in dwelling consents issued. New Zealand house prices are expected to rise in 2024-25, further supporting the number of dwelling commencements. However, they will still remain unaffordable to many due to cost-of-living pressures.

The initial lockdown period significantly boosted the New Zealand household savings rate throughout 2020, meaning more New Zealanders accumulated deposits for houses. This trend drove a significant increase in the demand for new dwellings in 2021-22. Residential housing prices in Auckland and Wellington skyrocketed over the period, sparking robust construction activity and leading to record numbers of dwelling consents issued. This trend is despite the rebuilding efforts winding down following the Christchurch and Kaikoura earthquake recoveries. Additionally, a low-interest rate environment at the start of the period heightened investor appetite for residential real estate, bolstering construction activity and dwelling consents issued. Over the past three years, the number of dwelling commencements has fallen, largely on the back of a soft construction market and high interest rates.

The housing supply shortfall has limited further declines in the number of dwelling consents issued over the past five years. Multiple initiatives like the Residential Development Underwrite programme developed by the New Zealand Government (Te Kawanatanga o Aotearoa) have sought to address the housing shortage, placing upward pressure on dwelling consents issued. Overall, IBISWorld forecasts the number of dwelling consents issued to fall at a compound annual rate of 1.9% over the five years through 2024-25.