NZ building consents decline in May; rising immigration gobbles limited supply

Residential building permits in New Zealand declined in May, following a shortage of housing supply, created by net immigration that hit record high in Auckland.

New Zealand's residential building consents declined 0.9 percent in May with seasonally adjusted consents slipping to 2,377 in May from 2,398 in April when they rose 6.8 percent, data revealed by the Statistics New Zealand showed Thursday.

Further, house permits slid 4.9 percent following a 15 percent rise in April. On an unadjusted basis, new housing consents were up 16 percent to 2,520 in May from the same month a year earlier, and up 13 percent on an annual basis to an 11-year high of 28,387.

Net record migration in the country’s largest city of Auckland is creating unaffordable pressure on the housing budget of many, as a shortage of supply is wrecking havoc on residential property prices. The latest data shows Auckland building consents advanced 4.8 percent to 732 in May from April and were 13 percent ahead of the same month a year earlier.

"Running annual totals for Auckland residential consents suggest that the number of annual consents is flattening out in the 9,300 to 9,600 range," said David Norman, Industry Economist, Westpac Banking Corp, in a recent note.

In addition, the value of building consents rose 16 percent to USD1.57 billion in May from the year earlier month. The value of residential buildings jumped 24 percent to USD1.08 billion while the value of non-residential buildings edged up 1.3 percent to USD492 million.

Meanwhile, Norman further mentioned that the slowdown in Auckland is bad news given the shortfall of housing in that city, but it appears to be the result of developers waiting for the Auckland Unitary Plan to be finalized before proceeding with development.