Liz Kendall, Sneior Economist at ANZ, notes that the number of dwelling consents increased 14.7% m/m in March for NZ economy, following an upwardly-revised 6.4% increase in February. 

Key Quotes

“This increase was driven by multi-dwelling consents – up 44.2% in March, following a 16.3% increase in February. About three quarters of this increase was in Auckland.”

“Consent issuance can be volatile from month to month, especially the multi-dwelling component.Despite monthly volatility, today’s outturn was strong. In trend terms, dwelling consent issuance is growing at 2.0% per month – a solid pace, particularly in the context of already-high levels. Consents for ‘houses’ increased 0.1% m/m, but this follows 2.2% growth in February and 4.0% growth in January. Annual issuance is running at 31,600 consents. Consent issuance is at a high level and testing the limits of capacity constraints.”

“But despite high levels of activity, it’s not all smooth sailing: the construction industry is grappling with capacity, capital and cost constraints. Construction firms are downbeat and are experiencing squeezed profits, according to the ANZ Business Outlook survey. In this environment, we believe consent issuance will struggle to push much higher.”

“Cost pressures have increased. The value of consents per square metre is running at 9.9% y/y (3mma). Consistent with construction cost inflation continuing at its current moderate pace of 5.3%, or perhaps even pushing a touch higher.”