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Property analyst Bob Dey says latest building figures confirm the housing industry is in “free fall” and the construction industry is now “out of control.”
The number of new housing units authorised in January fell 8.2%, seasonally adjusted, according to a new report from Statistics New Zealand.
Government statistician Geoff Bascand says including apartments, there were only 812 new housing units authorised for the month, which is the lowest total since the series began 34years ago.
The construction industry – one of New Zealand’s largest employment sectors – is now “out of control” says Mr Dey, and the government will need to take measures to ensure more buildings, up to 1500 a month, are authorised in order to keep house prices balanced and the building industry employed.
“The efforts of the government so far to fix that will not prove to be adequate,” he says.
The total number of new buildings for the year is down to just over 17,000 for the year, down from 25,000 last year – a 31% drop.
The drop off in construction of new housing will be insulating house prices from correcting faster and closer to historic norms by massively reducing supply.
The number of new housing units authorised has been falling rapidly since June 2007, and is now half the level it was then.
And for the first time since 1988, the value of consents issued for non-residential buildings ($362 million) exceeds the value of consents issued for residential buildings ($329 million).
Residential buildings made up 48% of the total value of all buildings for the month, with non-residential buildings contributing 52%. In the previous 12 months residential buildings averaged 58%.
Apartments made up 8% of new dwellings authorised for the month, compared with a monthly average of 11% for the previous 12 months.
The value of all consents issued for buildings was $692 million, a decrease of 19% compared with January 2008.
This slowdown will lead a lot of builders going to New South Wales and Queensland says Mr Dey, where housing is being encouraged, and significantly fewer apprentices being employed – so that when the industry does turn around in “say, three years or so,” there will be few skilled staff ––meaning a saga like the leaky buildings fiasco is significantly increased.