Statistics New Zealand (Stats NZ) believes that a year-over-year decline in building permits for October will not dampen growth prospects for the apartment market.
Melissa McKenzie, Stats NZ construction statistics manager, described the fewer number of approvals not as part of a market slowdown. New building approvals totalled 2,549 in October, down from 2,575 in the year-ago period.
Industry analysts suggested not being concerned about the decline in consents. The Economist Infometrics, for instance, believes that housing supply slightly improved despite the recent decrease in apartment approvals. Construction equipment rental suppliers may still notice a steady demand for services, particularly in Auckland where total dwelling consents rose 19% in October year over year.
Economist Infometrics also expects permits in Auckland to continue rising in 2018, although a shortage of construction workers presents some challenges in deploying more residential properties. According to Statistics NZ, stand-alone homes accounted for the largest spike in permits in Auckland. In other cities such as Wellington, residential construction activity has been on an upswing as well.
Stats NZ said that home construction in Wellington rose 33% to $956 million in September year over year. New properties such as homes, apartments, and retirement villages comprised $704 million of building activity, while renovations accounted for the remaining amount.
On the other hand, non-residential construction amounted to $759 million, up 19% from September 2016. The overall value of construction work reached more than $1.7 billion, which represented a 27% increase. Given these numbers, Wellington outpaced any other region in New Zealand for construction activity in 2017, according to McKenzie.
Despite the drop in new apartment consents for October, the upbeat sentiment among analysts and strong performance of some cities indicate stability for New Zealand’s property market.