Less New Homes Being Built In Auckland

Latest updates just released by Statistics NZ show that there were 2550 new dwellings consented throughout the country in September, being;

  • 1,892 houses
  • 393 townhouses, flats, and units
  • 206 apartments
  • 59 retirement village units

building-consents-sept

This level of consents is well down from the 2834 consented in August, 2811 consented in July and 2752 consented in June so there is an obvious dip, but as illustrated on the graph above we have seen a steady increase so is this just another short-term dip or the start of a new downward trend?

The building consents are still up 13.7% when compared to September last year.

Significant Drop In Auckland Housing Consents

The drop in housing consents is greater in Auckland where there were just 752 new dwellings consented in September, compared with 970 in August, 1087 in July and 921 in June. Year on year there are now more houses being built with 752 dwellings consented in Auckland in September which was up compared to the 643 consents issued in September last year.

The real issue is that there has been a huge focus on increasing the housing supply in Auckland to combat the housing shortage, and if these statistics are a true indication of a new trend then that would suggest that the housing shortage may not be fixed for some time yet.

So why have the housing consents slowed?

We Cannot Blame The LVR Rules

The decline of consents issued in September was across all housing types – apartments, houses, retirement village units and townhouses/home units. We cannot therefore blame it on a decline within a specific type of new build.

Some people will of course blame the Government (they always do – for everything!) or the new LVR rules introduced by The Reserve Bank.

The reality is that it shouldn’t be anything to do with the LVR rules as new builds are exempt so those LVR rules do not apply. This means that people can still borrow up to 90% with new build finance from some of the banks.

We believe the real issue is the confusion in the market about what people can borrow.

rule-books

Get Expert Advice From A Mortgage Broker

The LVR rules that were introduced by The Reserve Bank are clear – new builds are exempt.

The problem is the banks also have their own set of rules or policy, but a lot of banks have been constantly changing their own rules and this has caused a lot of confusion within the banks, with the bank staff and ultimately it has resulted in the wrong information being circulated.

As a mortgage broker with a focus on the new build finance market I have made it a priority to keep up to date with all of the rules and policies from the various banks and lenders.

We are getting enquiries all of the time now when people have been given the wrong information from their bank, and sometimes even been told they do not qualify for a construction or new build loan or even had their finance application declined. In some of these situations we can get an approval from the same bank but it can sometimes mean that we have to explain how the rules should be applied to the bank!