Canterbury Construction Report (Residential) August 2022

Why are building consent numbers continuing to increase?

This month there were 727 new residential dwellings consented (across all three Councils).

So far this year, there has been three months with more than 700 dwellings consented…this is greater than the previous highest number of consents issued (626), which was the absolute peak of the earthquake rebuild in November 2014.

So why are we consenting so many new dwellings?

Well, you have to look at each Council individually to understand where this extraordinary growth is occurring.

Year to date (8 months to August 2022):

Christchurch is up by 40%

Selwyn is down by 4%

Waimakariri is down by 9%

So why the massive variance?

In December 2021, I predicted that the number of new dwellings would come back by between 10% and 15%.

Although we are seeing a moderate decline in consents in Selwyn and Waimakariri, it is the continued growth in multi-unit apartments in Christchurch that continues to drive the overall increase in numbers.

In August, 74% of all new dwellings consented in Christchurch were part of a multi-unit development. This is the highest percentage of units compared to individual dwellings that I have ever recorded.

Of course, the Christchurch City Council is still well behind in processing building consent applications (in August, less than half of all residential building consents were processed within the required 20 days) and the current level of output by the CCC is largely down to “catching up”.

However, with 368 units across 47 consent applications, it is clearly these medium density developments that continue to drive the increase in Christchurch construction numbers.

How long can this go on for?

That’s hard to say, but I believe that this segment of the market is now significantly over supplied, with investors being the primary purchasers. The word on the street is that sales of these units has slowed. With increasing interest rates and falling capital values, some investors may look to exit the market…which could leave some developers in a difficult position.

The next couple of months will certainly be interesting.

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