Govt responds as building consents keep trending down
One of the best ways to improve housing affordability is to increase the number of new dwellings being built, which is why the quarterly home consents data from Stats NZ is so interesting.
The latest release shows there were 33,677 new homes consented in the year to September 2024, which was 16.7% lower than in the year to September 2023.
Multi-unit consents fell 24.7% to 17,902, while house consents fell 5.1% to 15,775.
Consents have been trending down since May 2022, when there were a record 51,015 consents (26,479 multi-units, 24,536 houses).
Government provides finance support to developers
With that in mind, the Government recently unveiled the Residential Development Underwrite, which is a temporary scheme to help the residential construction sector recover from the effects of the downturn.
The Residential Development Underwrite will underwrite credible developers, so they're able to qualify for loans they wouldn't have otherwise received – and therefore build more homes.
“For a development to be approved for the underwrite, it must have a minimum of 30 houses. The developer must have a proven track record of successfully building and selling houses of a similar size and scale, have ownership or use of the land (or an option to do so), and have all the required resource consents for residential housing,” Housing Minister Chris Bishop said.
“In addition to providing a recent market valuation from a registered valuer, the developer must also be able to provide satisfactory evidence that underwrites are needed for the development to proceed within 6-12 months – for example, evidence that reasonable attempts have been made to market the development, that finance approval is conditional on pre-sales and that the required workforce is available. There will be no price caps or eligible buyer restrictions.”
Developers welcome new scheme
The Master Builders Association of New Zealand said the Residential Development Underwrite would restore confidence in the homebuilding sector and make it easier for developers to secure finance approval for new builds.
“Access to finance remains one of the most prominent challenges for the building and construction sector, with 83% of our members citing it as their top challenge in the 2024 State of the Sector survey,” Chief Executive Ankit Sharma said.
“By focusing on larger developments with proven developers and the required consents, we expect this scheme will go some way towards speeding up key projects and improving affordable housing supply, especially in high-population areas like Auckland, Hamilton, Tauranga, Wellington and Christchurch.”
Finance first, building second
Are you thinking about building a new home?
If so, please contact me before starting the project, as you need to know how much you can borrow and the cost of finance before you start building.
That way, you can crunch the numbers and make an informed decision about how much to invest in the property.