Analysts at ANZ note that the number of residential dwelling consents in New Zealand increased by 5.1% m/m in December (seasonally adjusted) as they continue to bob around at a high level, lifting 5.2% in Q4 after a weak (-11.1%) Q3.

Key Quotes

“Overall, issuance remains consistent with our view that construction activity will remain at a high level, but struggle to accelerate given acute capacity constraints.”

“Annual consent issuance remains very elevated; a little over 32,900 new dwelling consents were issued over the past year. However, issuance has struggled to push higher over the past year or so – remaining shy of highs reached in the mid-2000s (of more than 33,000 dwellings).”

“Overall, housing demand remains strong and supportive of further building work. There is plenty of pent-up demand out there, reflecting strong population growth, gradually rising household incomes and low interest rates. And the supply side should remain busy for a while yet trying to meet this. However, the construction industry is facing challenges of rising costs, labour shortages and delays, which may limit the scope for activity to go higher.”