Auckland Faces Decline in New Home Consents and Extended Build Times

January 14, 2025
Auckland Faces Decline in New Home Consents and Extended Build Times

The once booming residential building sector in Auckland is witnessing a pronounced slowdown, characterized by a marked decrease in new home consents and significantly extended construction times. The emerging trend of a sustained decline in consents for new dwellings is an indicator of increasingly challenging conditions within the housing market. In tandem with the dwindling consents, the duration it takes to complete the construction of new homes has also lengthened notably. This dual challenge is not only affecting housing availability but also posing complex problems for both developers and potential homebuyers in the region.

Significant Decline in New Home Consents

In the past two years, Auckland has experienced a sharp 37% drop in new home consents, a decline that speaks volumes about the current state of the housing market. According to recent figures, only 13,863 new dwellings were consented in the 12 months to October 2024. This stands in stark contrast to the 16,669 new homes consented in the 12 months to October 2023 and an even higher count of 21,960 in the 12 months to October 2022. The decline translates to a total of 8,097 fewer homes being approved for construction, signaling a substantial reduction in the pipeline of new housing supply. This contraction in the number of consents is concerning, given the city’s ongoing struggle to meet the rising demand for housing.

The reduction in new home consents can be attributed to several factors, primarily revolving around the current housing market’s dynamics. Developers are increasingly cautious and often delay the initiation of new projects until the economic conditions appear more favorable. The uncertainties surrounding the market make it challenging to forecast buyer demand, leading some small builders to wait until they have confirmed buyers before commencing construction. Additionally, larger developments are increasingly being approached in stages rather than full-scale immediate construction, further contributing to the slowdown. This cautious approach is intended to mitigate financial risks, but it also exacerbates the issue of extended build times.

Extended Build Times in Residential Construction

An equally pressing issue plaguing Auckland’s housing sector is the significant extension in the time it takes to complete new home construction projects. Previously, it was common for about 90% of new homes to be completed within two years of receiving their consents. However, by October 2023, this figure had dramatically fallen to around 65%, indicating a noteworthy increase in the number of projects facing delays. The initial disruptions caused by the COVID-19 pandemic, such as supply chain issues and labor shortages, have played a substantial role in these delays. Although many of these immediate problems have been resolved, the delays persist, pointing to deeper, systemic issues within the building sector.

The impact of these prolonged build times cannot be understated. The number of consented dwellings that remained uncompleted after two years rose significantly from virtually zero in 2018 to approximately 4,000 by October 2024. This backlog highlights inefficiencies in the construction pipeline, creating a bottleneck effect that stymies the overall housing supply. For prospective homebuyers, these delays mean longer waiting times and increased costs, as holding costs and inflationary pressures mount over time. For developers and builders, the delays present financial strains and complicate project management, particularly when trying to align stages of large-scale developments or synchronize the completion of units to match market demand.

Implications for Housing Market and Future Supply

The once thriving residential building sector in Auckland is experiencing a notable slowdown, characterized by a significant drop in new home consents and much longer construction times. This new trend of declining consents for housing indicates growing challenges within the market. Alongside the drop in consents, the time required to complete new homes has also risen considerably. This dual hurdle is impacting both the availability of housing and creating difficulties for developers and potential homeowners. The combination of fewer building consents and extended construction periods is leading to a complex situation, where reduced housing availability is making it harder for those looking to purchase new homes. Additionally, developers face increased complications due to these delays and the reduced number of projects. It’s a challenging scenario for Auckland’s housing industry, affecting the overall market dynamics and causing potential long-term ramifications as stakeholders navigate these increasingly tough conditions.

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