Building Consents on the Rise

Lack of supply has been a big issue in Auckland in particular, with high demand driving up prices across the city.  However, with 628 new consents recorded in May, this tide might finally be starting to shift.  While interest rates are still low and lack of supply is not the only factor influencing high prices, consents are up 74 percent from a year ago, giving buyers reason for optimism.  Ongoing construction in Christchurch is also a big factor in these figures, with the Auckland and Canterbury regions accounting for 57 percent of all building consents in May.

When apartments are also entered into the equation, the trend for new dwellings has been rising for the 26th month in a row.  We are still a long way from the long term peak of 2004, however, even with all the activity in Christchurch over the last couple of years. Statistics New Zealand's industry and labour statistics manager Blair Cardno said even though new building activity is 73 percent higher than the historic low point of March 2011, it is "still 37 percent lower than the peak of January 2004." 

While the jump in building consents will raise supply levels over the next year, lack of supply is far from the only factor affecting price escalation.  The historic low level of interest rates is a huge issue affecting house price inflation, as are geographic limits on expansion, an increasing population, and a migration boom in many parts of the country.  According to a recent story from The Telegraph in the U.K, 18 percent of would-be British expats would like to settle in New Zealand, up from only 8 percent a year ago.