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Andy Jackson / Things
Construction consents provide a window on the health of the home construction sector, but the full effects of the blockade have yet to be seen.
Construction consents have suffered their worst month in almost 12 years, after the closing of the operation slowed down the prosperous housing construction sector.
Residential consents for houses and townhomes fell sharply by 21 percent in March, the biggest monthly drop since October 2008, during the global financial crisis.
Before that, the residential market was advancing at full speed, 5.7 percent in February, as the Auckland market received a fresh wind.
Builders have now largely returned to work under strict social distancing measures, but the industry is concerned about the coming months and the possibility of some consents being filed.
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“Once it collapses, a strong rebound is inevitable, but a weakening trend is also expected to prevail for some time on the other side of this,” said ANZ senior economist Liz Kendall.
Non-residential consented work was also reduced, by 10% per month.
Weak demand and investment in housing would weigh on the sector, and companies with profitability and productivity challenges that were masked by good times could be exposed, he said.
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Auckland’s consents continued to be more resilient, reflecting the housing shortage.
Auckland and Canterbury suffered the least with only a 5.3 percent drop in consent, offsetting the rest of the country that saw consent drop to 38.3 percent.
Annually, consents rose to 37,440, the highest level of home construction work in years.
ASB chief economist Jane Turner said the drop in approvals was understandable given the loss of four business days in March, and that it would continue in April, although the ability of council staff to work from home would mean that consents were not would be zero.
The boost would mean “short-lived” rebounds in May and June. But as the year progresses, there will likely be a sharp drop in house prices, and some projects may be canceled.
Workers could also be difficult to obtain, as border restrictions prevented them from entering the country.
However, ” this drop in private sector demand will free up some of the available capacity in the construction sector, and later this year may be an opportune time for the Government to expand its own construction plans for non-residential homes and buildings. residential, ” Turner said.
