OPINION: New building consents important to stability of housing market

OPINION: The number of homes for sale on a monthly basis is as high now as it has been at any period in the last 18 years and it is credited with being a major contributor to keeping house prices from increasing.

Good news for buyers – in terms of price, the choices it gives them and the lack of pressure on them to make a quick decision to ensure they do not miss out on a particular property.

However, not such good news for vendors, particularly that cohort of vendors who are looking to sell before they can commit to buying. For them It can lead to a long trail of potential buyers needing to sell before going unconditional. One break in the chain can lead to multiple ‘deals’ unravelling.

Also. many existing owners like to feel that their major asset is increasing in value over time, so long periods of static house prices can make homeowners feel a little less well off.

There are a number of market analysts that feel that what we are currently experiencing is the new norm, and high numbers of homes for sale is likely to stretch into the early years of the 2030s.

Others, however, are keeping their eye on two key trends that impact on housing supply – the issuing of building consents and population growth.

Building consents, while still being applied for and approved in healthy numbers, have fallen from their peak of around 50,000 in 2022 to around the mid-30,000s last year.

A building consent is permission to build a house, and one issued today can take anywhere from a year to two years for the consent to become an occupiable dwelling.

The critical need for building consents to remain strong becomes apparent when you look at Stats NZ’s forecast for the likely population growth through to 2030. It is for an additional 200,000 to 250,000 people, or about 40,000 to 50,000 people a year. Based on the current average household size of 2.6 people, that equates to the country needing 18,000 new homes a year to house them.

Immigration is likely to account for up to two thirds of that population growth, and this has implications for housing, as immigrants tend to gravitate to our biggest urban centres. In recent times more than half of all new immigrants have settled in Auckland, the primary drivers for this being perceived work opportunities and existing family links.

Any fall off in building consents below 30,000 over the next 5 years could see the available housing stock eaten into very rapidly, resulting in pressure on houses for sale and for rents.

As always with housing, particularly in the larger urban centres, there is no guaranteed ‘future’ as to where house prices and rents might go.

Presently, the economy is subdued, but there are enough positive signs indicating it is ready to start its next growth cycle, which in turn will lead to the leash on house prices and rents being loosened.

Trying to predict where prices may go from here is a thankless task.

There are, however, positives to hold on to. While property prices remain static, houses are selling and based on our first six months of trading, this year we are likely to sell at least as many homes as we did last year, and 2025 was our best year for sales for 3 years.

The second is the mini building boom that the country has experienced over the past few years. New builds not only improve the quality of the housing stock and the range of properties for sale, but they also encourage vendors of existing property to present their property in prime condition to be competitive.

Peter Thompson, Managing Director,

Barfoot & Thompson