New Zealand set to build fewer homes and smaller homes

The latest home consents data from Stats NZ has revealed a reduction in the pipeline of future housing and confirmed the emergence of a new housing trend.

A total of 42,110 new homes were consented in the year ending August 2023. That was 16.9% lower than the year before (50,653 consents) and 17.5% lower than the record result in May 2022 (51,015).

However, it was still higher than in any 12-month period before 2021. In other words, consents remain at a historically high level.

New Zealander is building smaller homes

One of the interesting parts of the latest home consents data was that it confirmed the emergence of a new trend towards higher-density living.

Of the 42,110 new homes that were consented across New Zealand in the year to August, 17,267 were for standalone houses and 24,843 for multi-unit homes – so more multi-units than houses. Traditionally, though, it’s been the other way round.

Since records began in 1991, the number of building approvals for houses was consistently higher than for multi-units, but this changed in mid-2022. Now, month after month, multi-units come out on top.

If we compare the August 2013 and August 2023 data, consents have increased a modest 9.2% for houses but a whopping 587.4% for multi-units.

So it seems an increasing share of New Zealand’s new housing will be smaller townhouses and flats, rather than the traditional standalone houses many people grew up in.

Why you should get a pre-approval

Whether your clients want to buy a house, townhouse or flat, I’d love to help them finance the purchase.

It’s important they get a pre-approval before they start their search, so they don’t fall into the trap of committing to buy a property that, ultimately, they can’t afford because the lender won’t give them a large enough home loan.

But if they get a firm idea of their borrowing capacity upfront, they’ll be able to search with confidence. They’ll also improve their negotiating position, because, as you know, vendors tend to prefer buyers who have their finance in place.