Archive | Construction

New home consents jammed in 1000/year range

Consents for new homes, which fell one dwelling short of 30,000/year 12 months ago, remained jammed in the 30-31,000/year range in September.

The 2770 consents for the month were up 6% on a year ago, and the 30,892 consents for the year were up 3% on the previous 12 months.

Values, on the other hand, were well ahead – up 14.2% for the month, 8.6% for the year. (Total consent values don’t work out neatly to price/dwelling because of the way consents for large staged projects are handled, but have been running well above rises in consent numbers, an indication at least that housing costs have been rising well beyond official inflation figures.)

Statistics NZ said today it had reviewed how it deals with seasonal adjustment – highlighted by the problem of trying to compare March & April figures when Easter habitually wanders from one month to the other, but affecting other times of the year as well. The issue of staging, especially large apartment projects, is probably a bigger factor.

The result of the revision for August was a cut in seasonally adjusted numbers from 10% to 5.9%. On that basis, I’ll stick to actuals. Click the link below to check that story.

Standalone homes’ share of the market fell 6 percentage points from a year ago to be dead on two-thirds of new consents, and fell by 2.4% annually. The number of standalones consented fell by 49 for the month, 109 for the year.

The less visible sign of intensification, suburban townhouses & flats, has grown to 15% of the market, but the more visible apartment sector has been more volatile, heavily dependent for years on offshore investors to get projects started.

Many of the newest apartment developments are smaller than the big-block central area highrises, coming in under 50 units and more easily bankable as the smallest units in them are no longer in the “shoebox” category.

Apartment consents were up over 53% for the month & 22% for the year. Their share of the new-home market jumped to 10.2% for the year & 15% for the latest month.

The national consent numbers for September and the year to September, compared to September last year, and the latest 12 months compared to the previous 12 months:

Total consents for new homes: 2770 (2614), up 6%; 30,892 (29,999), up 3%
Total values for new homes:  $1.21 billion ($1.06 billion), up 14.2%; $13.27 billion ($12.22 billion), up 8.6%
Standalone homes: 1843 (1892), down 2.6%; 21,190 (21,299), down 0.5%
Apartments: 415 (270), up 53.7%; 3152 (2570), up 22.6%
Retirement village units: 85 (59), up 44.1%; 1856 (2037), down 8.9%
Suburban townhouses & flats: 427 (393), up 8.7%; 4694 (4093), up 14.7%
Standalone share of consents: 66.5% (72.4%), 68.6% (71%)
Apartments share of consents: 15% (10.3%), 10.2% (8.6%)
Suburban townhouses & flats share of consents: 15.4% (15%), 15.2% (13.6%)

Consents for new homes in the Auckland region rose 6.4% this September compared to last, and 3.6% for the year.

Auckland residential consents for August, compared to August last year, and the latest 12 months compared to the previous 12 months:

Region: 868 (816, revised up from 752), 10,317 (9960)
Rodney: 58 (64), 1018 (931)
Albany: 183 (270, revised up from 206), 2449 (2300)
North Shore: 37 (110), 427 (609)
Waitakere: 81(47), 578 (601)
Waitemata & Gulf: 192 (33), 1130 (1061)
Whau: 11 (14), 293 (307)
Albert-Eden-Roskill: 18 (15), 801 (625)
Orakei: 13 (15), 246 (357)
Maungakiekie-Tamaki: 54 (20), 635 (351)
Howick: 48 (32), 410 (588)
Manukau: 27 (29), 430 (411)
Manurewa-Papakura: 87 (91), 948 (1015)
Franklin: 59 (76), 952 (804)

The regions consenting the most new homes in the September 2017 year were:

Auckland: 10,317 (up 2.9% from a revised figure for the September 2016 year, up 3.6% on the original)
Canterbury: 5122 (down 18% as the post-quake rebuild continues to wind down, but still at a historically high level)
Waikato: 3596 (up 1.7%)
Bay of Plenty: 2596 (up 4.8%).

Non-residential building consents constituted 31.9% of the total market in September, down from 32.4% for the previous 12 months, and 30.4% for September, down from 31.9% a year earlier.

All construction for September compared to September last year, and the latest 12 months compared to the previous 12 months:
Total: $1.799 billion ($1.598 billion), up 12.5%; $20.1 billion ($18.71 billion), up 7.5%
Non-residential: $546 million ($509 million), up 7.4%; $6.413 billion ($6.053 billion), up 5.9%.

Related stories:
Today: 10% becomes 5.9%, just like that
2 October 2017: Monthly building consents up on a few spikes, annual growth sluggish

Attribution: Statistics NZ tables & release.

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10% becomes 5.9%, just like that

This little snippet at the foot of today’s building consents release from Statistics NZ shows how kind I was to readers and to statisticians by declining to use seasonally adjusted figures many years ago.

In a note to today’s release, Statistics NZ said: “We have improved the way we calculate the seasonally adjusted number of new homes consented. We now include an adjustment for the timing of Easter. As a result, the seasonally adjusted increase in the number of new homes consented in August 2017 has been revised down from 10% to 5.9%.”

For its latest seasonal adjustment calculations, Statistics NZ said: “The seasonally adjusted number of new dwellings consented fell 2.3%, following a 5.9% rise in August. For houses only, the seasonally adjusted number fell 1.7%, following a 3.1% fall in August.

“The trend for the number of new dwellings consented increased, and is at its highest level since early 2004.”

I haven’t gone back to Statistics NZ to ask what Easter has to do with August. Such a large revision – what looks like an admission of a 41% miscalculation, and lacking a real, credible explanation – will keep me wary of these adjustments for some time yet.

In these columns, you’ll continue to get comparisons from year to year, one month against the same month. Or, as I noted in May 2008, my solution when I quoted then-Government Statistician Geoff Bascand, showing the difficulty Statistics NZ had with seasonal adjustments: “The earlier occurrence of the Easter holidays in March, rather than April, may have contributed to this increase, although the exact effect is difficult to measure.”

My solution was to lump the 2 months together, March + April, when comparing hotel occupancy, for example.

But the changes are refreshing

Government Statistician Liz MacPherson warned of this month’s change in the September release on building consents, under the heading Upcoming changes to seasonally adjusted & trend series. I’ve repeated her message below:

“We are improving the way we calculate the seasonally adjusted & trend series in building consents issued. These changes will be introduced in the September 2017 release (published on 31 October 2017).

“All seasonally adjusted series will now include an adjustment for the timing of Easter. This will account for when Easter moves between March & April. This change will affect the entire time series.

“We are also updating the way we treat outliers in the trend for the value of non-residential building consents. Currently, we exclude consents with a value of $50 million or more from the calculation of the trend. This threshold will be increased to $100 million, backdated to 2006. Currently, these outliers are only excluded from the monthly trend. For consistency, we will now also exclude these outliers from the quarterly trend.”

Despite my scepticism about some calculations, I’m enjoying the changes emanating under new leadership at Statistics NZ. They’re aimed at giving more people better information that they can use – a worthy cause.

Link:
Statistics NZ: Building consents issued seasonal adjustment and trend changes in September 2017

Related story today: New home consents jammed in 1000/year range

Earlier stories:
2 October 2017: A new understanding of seasonal adjustment
13 May 2008: Campers lift March accommodation use, but hotel & motel occupancy down
1 February 2008: Statistics, lies & don’t knows
2 September 2006: Pick an apple, an orange and you can concoct statistical fruitcake
13 May 2006: Late Easter takes March occupancy down
8 May 2006: Don’t believe everything you read…

Attribution: Statistics NZ release.

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Statistics House demolition confirmed

CentrePort Ltd confirmed yesterday that Statistics House in Wellington would be demolished because of damage sustained in last November’s Kaikoura earthquake, now that insurers have decided the building is not economically viable to repair.

CentrePort will apply to Wellington City Council for consents to safely demolish the 5-storey office block. Chief executive Derek Nind said: “We’re pleased to have final certainty on the matter and will start planning for the building’s removal, working with our tenants, neighbours & other key stakeholders for its safe demolition.”

CentrePort is still working with its engineers & insurers on the status of the BNZ building.

Government Statistician & Statistics NZ chief executive Liz MacPherson welcomed an end to the uncertainty: “This announcement by CentrePort means we can draw a line under our past connection with Statistics House. Stats NZ staff have been progressively moving on, both physically & mentally, from Statistics House after the quake 11 months ago.

“We will be forever thankful that the quake happened just after midnight last November when nobody was in the building, rather than at midday during the work week.”

She said Statistics NZ was fully insured and was still working with insurers to determine a settlement. Staff have occupied other buildings in central Wellington since late 2016 and have leases in place for at least another year.

The Government Property Group is looking more broadly at accommodation for Wellington-based agencies, including Statistics NZ.

Attribution: CentrePort & Statistics NZ releases.

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Monthly building consents up on a few spikes, annual growth sluggish

The building consent figures for new homes issued on Friday were a comparative bright spot. Full figures including comparisons with last year are at the foot, below what I hope is an interactive graph.

Statistics NZ (which now calls itself Stats NZ) said 30,736 new homes were consented in the August 2017 year, compared with previous peaks of 33,251 in the June 2004 year and 40,025 in the February 1974 year.

Stats NZ said: “Monthly building consents for new homes reached a 13-year-high in August 2017, driven by a spike in apartments & retirement village units in Auckland.”

First, it’s not a record.

Second, it’s not enough.

Third, pricing remains askew.

The 3166 consents for new homes were up by 404 on the previous month and by 332 on the previous August. The increases involved several “spikes”, none of which involved standalone housing.

Of Stats NZ’s 4 categories for new homes:

  • Standalone house consents were up by 125 from July and 10 from last August to 2025
  • Apartment consents were up by 17 from July and 152 from last August to 384
  • Retirement village unit consents were up by 150 from July and 223 from last August to 295
  • Suburban townhouse & flat consents were up by 112 from July but down by 53 from last August to 462.

The total floor area was up 14.6% to 550,000m² from 480,000m² in July & 7.2% from 513,000m² last August (Stats NZ said 7.1%), on a number of consents up 14.6% from the 2762 in July and up 11.7% on the 2834 last August. I used to calculate precise shifts in size & costs until Stats NZ explained that the staging of consents for apartment developments, but not the precise matching of costs, meant my calculations were wrong.

In theory, more homes for a smaller increase in floor area would mean the average size/dwelling has fallen, which makes sense given increases in more intensive living quarters, but it’s too hard to calculate from these figures.

Consents for houses in August were just behind those for May (2025 versus 2039) and well ahead of any other month in the last year.

The intensive sectors

The apartments picture looks strong in the last 2 months (367 in July, 384 in August), and the retirement village segment of the market had its biggest month since November 2015 (295, versus 321 in that standout 2015 month).

The intensive housing sector that’s been strongest is suburban townhouses & flats, running well above 300/month in every month except 2 (December & January last summer) since January 2016, and topping 500 twice. Last August was one of those 2 plus-500 months, so the comparative decline to 462 this August is not exactly a fall in the overall context.

Context for the 13-year high

Statistics NZ’s comparison with a monthly figure 13 years ago also needs to be put into context.

Over the last 2 years, total consents for new homes have fallen below 2000 only in January (so twice), and this is the second time they’ve exceeded 3000 (3005 last November, 3166 this August).

If you check back to my February 2005 story (link below), you’ll see consents for new homes that January fell below 2000/month for the first time since February 2003 – another 2-year run of plus-2000s.

The added ingredient: the population rises

Over the 5-year census period 2001-06, the New Zealand population rose by 273,000 to 4.18 million (up an average 54,600/year). It’s now at 4.821 million (up an average 63,600/year over 10 years, or 16.5%/year more than during 2001-06).

At an average 2.7 persons/household, the extra population since 2006 needed an average 23,600 more houses/year, compared to 20,200/year more in the previous 5 years, so a 15.3%/year increase in construction required.

Those averages come with bumps, declines & cycles, and for several months the net inflow of migrants alone has been above 70,000/year. The total population has risen over the last 3 years by 83,000, then 100,000, and this year by 120,000 – and that most recent increase equates to demand for 44,400 homes.

The regulatory & banking responses

Not surprisingly, that huge excess of need over construction encourages speculation. The New Zealand answer, via regulators, has been to create measures discouraging speculation. Construction has been slow to rise.

As I wrote 2 months ago: “Consents for new homes exceeded 30,000/year in the 12 months to October 2016, the first breach of that round figure in 11 years, and there the altimeter has stuck.”

The latest annual figure for consents is 30,736, up just 3.7% on the previous 12 months and enough to cover the population rise of 2 years ago (assuming nothing is demolished and every home newly consented is built).

More intensification, or more difficult?

A feature of the latest consent figures is the 24.8% rise in apartment consents for the last 12 months, from 2409 to 3007. At the bottom of the global financial crisis downturn, 673 apartments were consented in the 12 months to August 2012.

Figures up to February 2015 are not easily compared to those before, because Stats NZ went from 2 categories – apartments in one, including retirement village units, all other housing in the other, seemingly including suburban townhouses & flats in the second category. From March 2015, the statistics were broken into the present 4 categories – houses, apartments, retirement villages, townhouses & flats.

In the 12 months to January 2005, consents were issued for 6065 apartments, up 23.5% on the previous year, in the second 12 months of an immigration spike. That figure was probably for apartments including retirement village units. Since then, intensification has been advocated more & more strongly, promoted, and the tally for all 3 intensive categories for the last 12 months is 9497 units, up 12.5% from 8439 in the previous 12 months.

The questionmarks

But there is a big questionmark over how many of those consents will turn into completed units, because of regulatory clampdowns on investors (including foreign investors) and impacts on first-homebuyers, including banking changes as both the Australian banks & banks in New Zealand (the big 4 owned from Australia) deal with tighter capital adequacy ratios.

One impact hard to spot from outside the finance sector is the size of apartment that a bank will lend on. A small upward shift in bankable unit size can make a one-bedroom unit impossible to buy, and can increase demand for 2-bedroom units, cutting the value of the smaller units (but not necessarily making them a buyable product) and increasing the value of the larger units.

Equally, there are questionmarks over how much immigration will be allowed, depending on who gets to become the NZ Government, and how much emigration there might be as Australia’s economy picks up, particularly in Melbourne construction & the mining sector.

Auckland consents up but slowing

Stats NZ started providing regional consent figures in 1991, and said on Friday 10,265 new homes were consented in Auckland in the August 2017 year, well short of the peak 12,937 in the June 2004 year.

The latest 12-month tally is up 4.2% from 9851 in the previous 12 months and up 19.2% from 8615 in the 12 months to August 2015. So, still rising but slowing, while demand continues to surge.

[The graph below is interactive on the Stats NZ website, and they’ve provided the code to make it interactive here, but it appears I have to use some special fingers as well as thumbs to make it work. Loads of comparative statistics lie below it.]

The national consent numbers for August and the year to August, compared to August last year, and the latest 12 months compared to the previous 12 months:

Total consents for new homes: 3166 (2834), up 11.7%; 30,736 (29,627), up 3.7%
Total values for new homes:  $1.37 billion ($1.18 billion), up 16.2%; $13.12 billion ($12.06 billion), up 8.7%
Standalone homes: 2025 (2015), up 0.5%; 21,239 (21,188), up 0.2%
Apartments: 384 (232), up 65.5%; 3007 (2409), up 24.8%
Retirement village units: 295 (72), up 310%; 1830 (2084), down 12.2%
Suburban townhouses & flats: 462 (515), down 10.3%; 4660 (3946), up 18.1%
Standalone share of consents: 64% (71.1%), 69.1% (71.5%)
Suburban townhouses & flats share of consents: 14.6% (18.2%), 15.2% (13.3%)

Auckland residential consents fall 28.8% for month

Consents for new homes in the Auckland region fell 28.8% this July compared to last July, but rose by 4.5% for the year. Consents for the month rose in 6 wards and fell in 7.

Auckland residential consents for August, compared to August last year, and the latest 12 months compared to the previous 12 months:

Region: 1184 (970), 10,265 (9851)
Rodney: 92 (72), 1024 (953)
Albany: 249 (242), 3036 (2273)
North Shore: 19 (35), 500 (519)
Waitakere: 36 (68), 544 (593)
Waitemata & Gulf: 150 (49), 971 (1061)
Whau: 16 (73), 296 (303)
Albert-Eden-Roskill: 115 (117), 798 (632)
Orakei: 14 (21), 248 (357)
Maungakiekie-Tamaki: 164 (45), 601 (344)
Howick: 73 (42), 394 (585)
Manukau: 48 (20), 432 (441)
Manurewa-Papakura: 115 (112), 952 (1015)
Franklin: 93 (74), 969 (775)

All construction for August compared to August last year, and the latest 12 months compared to the previous 12 months:
Total: $2.127 billion ($1.745 billion), up 21.9%; $19.9 billion ($18.68 billion), up 6.6%
Non-residential: $706 million ($534 million), up 32.3%; $6.375 billion ($6.163 billion), up 3.4%%

Earlier stories:
28 February 2005: Auckland consents tumble in January, average construction cost surges
28 January 2005: Residential construction value up 92% in 4 years, average construction cost up 24%
30 July 2004: Residential growth continues at phenomenal rate in June

Attribution: Statistics NZ tables & release.

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A new understanding of seasonal adjustment

For most of the 18-year lifespan of this website, I’ve steered clear of using Statistics NZ’s seasonally adjusted figures, after attending a seminar where a senior statistician admitted they didn’t know how to deal with Easter.

I also steered clear of US statistics altogether when I discovered the US Bureau of Census & Statistics (now with a similar but slightly different name) used seasonal adjustment on a figures done on a sample base – double jeopardy.

Although you might think this annual event, Easter – with a date known long into the distant future – is something about which everything can be predicted reasonably accurately, and after which accurate comparisons can be made, apparently this was not so.

If they don’t know that, I thought, I’m not going to give you seasonally adjusted figures because they’ll just be guesswork.

Government Statistician Liz MacPherson.

But as a postscript to the monthly building consent figures on Friday, Government Statistician Liz MacPherson added this missive:

Upcoming changes to seasonally adjusted & trend series

“We are improving the way we calculate the seasonally adjusted & trend series in building consents issued. These changes will be introduced in the September 2017 release (published on 31 October 2017).

“All seasonally adjusted series will now include an adjustment for the timing of Easter. This will account for when Easter moves between March & April. This change will affect the entire time series.

“We are also updating the way we treat outliers in the trend for the value of non-residential building consents. Currently, we exclude consents with a value of $50 million or more from the calculation of the trend. This threshold will be increased to $100 million, backdated to 2006.

“Currently, these outliers are only excluded from the monthly trend. For consistency, we will now also exclude these outliers from the quarterly trend.”

About Liz MacPherson:

The Statistics NZ website says: “Liz is passionate about evidence-driven decision-making and sees her role is to ensure New Zealand decision-makers at all levels have access to quality information.

Her view: “Statistics are only valuable if people use them. We collect & analyse them, and it’s vital we make them available in the ways people want them.

“We want the outside world to know what data we have and to use it. If we understand our customers’ needs, we can produce more relevant products & services that are used to make better decisions.

“If we understand our suppliers’ environment, we can better manage their delivery of data and negotiate solutions.

“If we understand what drives our stakeholders, we can collaborate for success.”

After senior roles over 20 years at the Department of Labour, the Ministry of Economic Development and the Ministry of Business, Innovation & Employment (MBIE), Ms MacPherson was appointed Government Statistician & chief executive of Statistics NZ in August 2013.

Every month, as you can see this month, Statistics NZ adds to the changes and the supply of information improves, despite the difficulties the organisation has faced following the Christchurch earthquakes, and again as a result of last year’s Kaikoura quake, which rendered Statistics House in Wellington unoccupiable.

Here’s one of those improvements introduced in July:

We’re making Stats NZ data easier to find

“This release is also available on our beta site, where we’re testing new formats for information releases & news. Help us make data easier to find by visiting the site, reviewing the content that matters to you, and sending us feedback.”

A change last month was to provide interactive charts. One I’ve used today comes with the code to make it work on this website as well as Statistics NZ’s – but, for the moment at least, the interactivity doesn’t work here:

Attribution: Statistics NZ releases.

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Home construction remains strong, non-residential slips

Warning: The item below contains a lot of dollar figures & percentages on work completed in the construction sector, hopefully put in perspective.

First, the positive figures for the 12 months through to the June quarter: all work put in place was up $2.6 billion on the previous 12 months to $20.6 billion. Work on new homes was up $1.7 billion to $11 billion, and all residential work was up $1.9 billion to $13.28 billion. Non-residential work rose by $700 million to $7.3 billion.

Work put in place during the latest quarter totalled $5.16 billion – $2.79 billion for new homes, $567 million for other residential work, $1.8 for non-residential.

Now, the percentage shifts.

After strong completion rates right through 2016, building work put in place nationally slumped (comparatively) in the March quarter of this year and growth was low in the June quarter.

Non-residential building work completed in the March quarter was up 5.1% on that quarter in 2016, but fell to 0.2% growth in the June quarter.

Work on new homes rose by 18.9% in the March quarter last year, and then by 26.4%, 27.6% & 24.1% in the next 3 quarters. This year, the growth rate wasn’t sustained but was still positive, falling to 14.8% in the first quarter and to 8.9% in the second.

Those shrinkages took total growth in the first quarter down to 10.9%, and to 4.9% in the second quarter.

On an annual basis, the fall is less visible because the rates of construction are still being held up by the 2016 growth. In the residential sector, after strong growth in 2014 (33.5% in the June 2014 quarter), growth tumbled in mid-2015 to a 9.3% increase in the second quarter and 6.6% in the third. The annual growth rate slipped to 15.9% in the June 2016 year, but rose to 18.4% in the latest 12-month period.

Now, in dollars.

In dollar terms, total work put in place has risen to a new level over the last 4 quarters, from a range down at $3.7 billion in the June 2014 quarter, climbing to $4.9 billion in the June 2016 quarter. Over the last 4 quarters, total work put in place fell just short of $5 billion ($4.935 billion) in the March quarter but was otherwise over $4 billion, reaching $5.157 billion in the latest quarter.

Non-residential work, down at $1.4 billion in early 2015, climbed above $1.6 billion/quarter in 2016, reaching $1.94 billion in the final quarter of the year. This year, non-residential work slipped to $1.68 billion in the first quarter but rose to $1.8 billion in the second.

Work on new homes has been above $2.7 billion/quarter for all the last 4 quarters – $2.8 billion in the December quarter & $2.79 billion in the June 2017 quarter. Annually, that has seen work on new homes rise by $1.7 billion in the last 12 months to $11 billion, and all residential work (including additions & alterations) rise by $1.9 billion to $13.28 billion.

Canterbury winds down, Auckland ramps up

Canterbury’s post-earthquake residential rebuild kept total construction there above $1 billion for every quarter since June 2014, but the total fell to $998 million in the latest quarter.

In Auckland, total work put in place went over the $1 billion mark in the September 2013 quarter, went over $1.5 billion in March 2016 and fell just short of $2 billion ($1.985 billion) in December. This year, it was down to $1.76 billion in the first quarter and back up to $1.95 billion in the second quarter.

Attribution: Statistics NZ tables.

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Housing market share moves away from standalones, but not to apartments

Over the last 5 years, standalones’ share of residential building consents has dropped from around 80% to, in the year to July, just below 70%. The cry from intensification advocates has been “Build up, not out”, so you might suppose the fall in standalones’ market share has been taken up by apartments.

And you’d be wrong. The apartment & retirement village sectors have both been left in the shadow of the suburban townhouses & flats. The demand has been for less garden but still some space, and not too far off the ground.

The statistics don’t differentiate between houses on a full section and cross-leases, but my impression is that cross-leases (including townhouses) are replacing houses on full sections in developments following site aggregation.

These are the shares of consents for houses & townhouses/flats over the last 6 July years:

2012: houses 80.5%, townhouses 6.4%
2013: houses 81.3%, townhouses 7%
2014: houses 76%, townhouses 9.7%
2015: houses 70.6%, townhouses 13.7%
2016: houses 71.5%, townhouses 13%
2017: houses 69.8%, townhouses 15.5%

Apartments & retirement village units shared about 13% of consents in 2012, and about 15% in the last 2 years.

As construction started to grow out of the global financial crisis in 2012, apartments represented only 4% of consents that year, against 9.1% for townhouses.

In the last 2 years, those consent shares rose to 7.7% for apartments and 7.8% for retirement villages in 2016, then to 9.4% for apartments this year, but falling to 5.3% for retirement village units – despite the well publicised growth in the retirement village sector.

More change will occur in Auckland’s suburbs as a result of Auckland Council’s unitary plan replacing all the old zonings, providing for more intensification throughout the suburbs and for taller buildings in & around business centres.

NZ Retail Property Group is developing apartments above its Milford mall and also intends to intensify at Birkenhead, 2 early examples of what will become a trend. On suburban streets, small site aggregations will allow for handfuls of townhouses to be built.

Bolder developers will take on larger aggregations, so you will see bigger developments of townhouses and some apartment blocks, but the focus will remain on adult occupants rather than more space for families.

I’d like to be proven wrong on that point, but I expect it will be some time before we see the US-style condominium developments for family occupancy. The strength of that market in the US, led by large corporate owners, pushed private home ownership down to 62.9% in the second quarter of 2016, the same level it was at in the third quarter of 1965. Ownership peaked at 69.2% in 2004-05. After the 2016 decline, the St Louis Federal Reserve Bank’s index rose to 63.7% in the December 2016 & June 2017 quarters.

Statistics NZ said in 2014, on the basis of the 2013 census, that individual home ownership here fell to 49.8%, down from 53.2% in 2006. In addition, homes owned by family trusts increased from 12.3% in 2006 to 14.8% in 2013, taking the totals in private ownership to 65.5% in 2006, and 64.6% in 2013.

The New Zealand way of doing intensive developments in the last 35 years has been for developers to sell individual units, and construction quality failures don’t seem to have dented the enthusiasm for this kind of individual investment.

The retirement village model could be replicated in the apartment & townhouse development sectors, where a corporate holds ownership for medium-term occupants, but there’s no sign of that happening yet. Developers here still look on development as their function in life, not a develop-&-beyond model.

If we had a more mature sharemarket where long-term thinking was espoused, there would be a natural place for developers & corporate owners of such property, but that, too, is a long way off.

Link:
1 September 2017: Consent movement on hold

Attribution: Statistics NZ tables, St Louis Fed chart.

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Consent movement on hold

In Wednesday’s newsletter I wrote: “Figures just released by Statistics NZ – building consents for new homes down 49 in July from July last year at 2762 – a lift in standalone house consents, falls in all 3 intensive housing categories (apartments, retirement village units and suburban townhouses & units).”

The first one relates to standalone housing’s share of the residential market, but I’ve run some statistical comparisons on that in a separate item.

Here are the details from Statistics NZ’s Wednesday release of the July figures:

New home consents up in mixed year

Consents for 2762 new homes were issued nationally in July, the third highest monthly tally this year but below a purple patch of 3 months last June-August.

This year, consents have been over 2700 in 3 months, but were down at 2100 in April, so it’s been a mixed picture.

In those 3 purple months last year, 2752 consents were issued in June, 2811 in July, 2834 in August. The volumes remained high through to December, including 3005 consents issued in November.

The election and constraints by the Reserve Bank & commercial banks have been blamed for a quieter housing period, and a drastic fall in foreign buyers (mostly Chinese) for a decline in the secondary housing market.

Given those circumstances, consent figures close to those of a year ago can be regarded as healthy, but it’s hardly surprising that consent numbers for new homes were up only 4.5% for the year and down 1.7% for the month, led down by all 3 intensive segments of the new housing market.

Annual consent level stuck in narrow band

The 30,404 consents for new homes – only 320 more than for the previous 12 months – maintains the consent level in a band just above 30,000/year, which was reached last October.

The national consent numbers for July and the year to July, compared to July last year, and the latest 12 months compared to the previous 12 months:

Total consents for new homes: 2762 (2811), down 1.7%; 30,404 (29,084), up 4.5%
Total values for new homes:  $1.18 billion ($1.03 billion), up 14.1%; $12.92 billion ($11.75 billion), up 10%
Standalone homes: 1900 (1761), 21,229 (20,790)
Apartments: 367 (425), 2855 (2242)
Retirement village units: 145 (189), 1607 (2278)
Suburban townhouses & flats: 350 (436), 4713 (3774)
Standalone share of consents: 68.8% (62.6%), 69.8% (71.5%)
Suburban townhouses & flats share of consents: 12.7% (15.5%), 15.8% (13.1%)

Auckland residential consents fall 28.8% for month

Consents for new homes in the Auckland region fell 28.8% this July compared to last July, but rose by 4.5% for the year. Consents for the month rose in 6 wards and fell in 7.

Auckland residential consents for July, compared to July last year, and the latest 12 months compared to the previous 12 months:

Region: 774 (1087), 10,051 (9622)
Rodney: 83 (71), 1004 (935)
Albany: 159 (215), 2529 (2250)
North Shore: 38 (18), 516 (502)
Waitakere: 42 (72), 576 (568)
Waitemata & Gulf: 183 (353), 870 (1032)
Whau: 16 (41), 353 (252)
Albert-Eden-Roskill: 14 (55), 800 (525)
Orakei: 27 (20), 255 (366)
Maungakiekie-Tamaki: 34 (16), 482 (388)
Howick: 34 (64), 363 (616)
Manukau: 18 (15), 404 (464)
Manurewa-Papakura: 55 (79), 949 (951)
Franklin: 71 (68), 950 (773)

All construction for July compared to July last year, and the latest 12 months compared to the previous 12 months:
Total: $1.786 billion ($1.675 billion), up 6.6%; $19.53 billion ($18.54 billion), up 5.3%
Non-residential: $576 million ($614 million), down 6.1%; $6.2 billion ($6.3 billion), down 1.5%

Link:
1 September 2017: Housing market share moves away from standalones, but not to apartments

Attribution: Statistics NZ tables.

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Top construction achievers all from one company, major awards for Wellington work, scholarships for aspirational projects

Above: Supreme award winner Andrew King.

All 3 young achiever award winners at the NZ Institute of Building on Friday night were from the same company, Dominion Constructors Ltd.

And the winners of the institute’s supreme, innovation & safety awards all won for their work on projects in the Wellington region.

In addition to those special & price category awards, the institute also honoured the convenor of its judging panel, Simon Barnes, and its charitable trust made its inaugural scholarship awards.

The institute awards recognise the professional excellence of individuals in the building & construction process, rather than the project or completed structure.

Supreme award for work on Wellington airport extension

The supreme award went to Hawkins Wellington project director Andrew King for his role in managing the Wellington Airport terminal extension – 6000m2 of combined new build & refurbishment at the southern end of the airport’s main terminal building and the reconfiguration of the airport’s southern apron.

The institute’s judging panel said: “Working within a live airport environment created multiple constraints around access, security, noise & other unique airline requirements. Having to work on a live airport apron meant that workers were placed within 20m of moving aircraft, and worker safety was of paramount importance.

“Due to the extreme operating environment, it was necessary to undertake a significant amount of high risk works out of peak hours. This resulted in nightshifts with up to 70 workers being run across a 22-month period. By utilising the resources & knowledge of the entire team, Andrew was able to deliver a high quality product within an agreed budget & programme.”

Aucklanders collect young achievers awards

James Reed.

This year, as last year, the young achievers awards sponsored by the Building & Construction Industry Training Organisation went to 2 recipients, Dominion Constructors senior project manager James Reed and Dominion Residential project leader Chris Bassett. Another Dominion project manager, Stephen Peters, was highly commended.

Mr Reed began his career with Dominion Constructors in 2007 as a cadet/trainee supervisor and has since undertaken site supervision & project management roles across a range of commercial & civil construction projects, and completed a bachelor of construction management degree.

The judging panel said: “James is Dominion’s youngest senior project manager, and an example of a new breed of construction managers who embrace technology and the advantages it brings to effective site & job management. He is an advocate for building information management (BIM) system and encouraged the company’s other project managers to adopt the technology. As chair of Dominion’s cadet committee, James manages the company’s cadetship programme, which includes 18 cadets.”

Chris Bassett.

Mr Bassett joined the construction industry as a carpentry apprentice straight from school. After a period of self-employment, he worked with a mid-sized company specialising in leaky homes and saw first-hand the results of poor design & workmanship. This provided him with the knowledge & skills to ensure that buildings he’s involved in are watertight. He joined Dominion Constructors in 2011 and within a year was in charge of a $23 million apartment complex.

In 2013 Dominion had identified the growth in multi-residential projects of scale in the Auckland market, and decided to develop specific capability to deliver large residential developments. The company created a residential division and Mr Bassett was part of the new team. He also leads & manages the Dominion apprenticeship programme, which currently has 15 apprentices.

Church restrengthening has ongoing benefits

Kerrin Manuel.

The winner of the innovation award, LT McGuinness Ltd project manager Kerrin Manuel, was driven by budgetary demands (the project was funded by donations & grants) & practicality for the strengthening of the St Mary of the Angels Church in Wellington, a heritage listed building damaged in the 2013 Seddon earthquake. The structure comprises 10 portals, made up of 15m-high archways on supporting columns that hold up both roof & walls. Restrengthening involved new foundation beams, new columns and most of the portals themselves.

The awards judges said: “Given the budgetary constraints, Kerrin developed a quicker & safer way to handle the core job. This involved making the temporary support towers for each portal mobile by adding structural castor wheels. This idea was further developed to become the internal rolling gantry that was ultimately used. Not only was the innovation practical, it cut 15 weeks out of the programme. This innovative approach had immediate benefits for the St Mary of the Angels project, while providing longer-term benefits for the construction industry, as the system can be utilised for other projects.”

It’s not hard, says safety award winner

Sarah McDonald.

Sarah McDonald won the safety award for her work on the $630 million Mackays-Peka Peka Expressway on the Kapiti Coast, delivered by the M2PP Alliance. She was alliance partner Fletcher Construction’s lead operational advisor for the project’s health, safety & wellbeing team and developed a strong safety culture among the teams assembled to deliver the 18km expressway.

The NZIOB judges said: “This was a significant challenge, given that there were up to 600 people working on site at any time. The M2PP Alliance invested $1.5 million into the creation of comprehensive HSW programmes that Sarah developed & put in place. The scale of HSW programmes was immense, with 5100 people delivering over 5 million working hours across the project’s lifetime.

“Sarah not only delivered the extensive induction training, she provided regular toolbox events& information forums, all of which were designed to achieve compliance and to instil a genuine culture change across all teams.

“One of the elements of Sarah’s performance that impressed the judges was that she implemented several key initiatives that could be successfully adapted for use by the wider construction sector.”

Ms McDonald told Friday’s awards function: “A lot of people make health & safety hard. It’s not hard. All we need to do is engage with our people. We used to lose about 20 people/year in 1999, when Site Safe was set up, and we’ve brought that number down.”

WorkSafe NZ statistics show the construction industry has had 39 workplace fatalities since 2010, well behind the 119 in agriculture and just ahead of transport, postal & warehousing (31) and forestry (30).

The construction sector has had 6 fatalities so far this year, the same number as for the whole of 2016.

Ms McDonald also said she’d moved to Site Safe this month to take safety education to a wider audience.

Simon Barnes.

Judging convenor gets award too

Institute fellow & convenor of its judging panel, Simon Barnes, congratulated the award entrants, and was then honoured himself when he received the NZIOB medal, the first time it’s been awarded since 2012.

Mr Barnes, a quantity surveyor, has 40 years’ experience in a wide range of commercial, residential, industrial & retail developments and was awarded the institute medal for his significant contribution to industry practice. He was a director of Davis Langdon and its predecessors for 25 years before its sale to Aecom in 2010. With Scott Beagley & David Doherr, he formed a new project consultancy, Barnes Beagley Doherr Ltd, in 2013.

Category & overall awards (sponsors in brackets):

Supreme award (Gib): Andrew King, Hawkins Wellington project director
Innovation (James Hardie): Excellence, Kerrin Manuel, LT McGuinness project director for St Mary of the Angels Church, Wellington; highly commended, Brett Naylor, Beca digital delivery leader & project director for the Mason Bros building, Wynyard Quarter
Safety (Site Safe): Excellence, Sarah McDonald, M2PP-Fletcher Construction senior health & safety advisor for the Mackays-Peka Peka Expressway, Kapiti Coast
Young achiever (BCITO): Excellence, James Reed, Dominion Constructors project manager; and Chris Bassett, Dominion Constructors project leader; highly commended, Stephen Peters, Dominion Constructors project manager

The winners of the 7 project cost category awards were:

Under $2.5 million (Resene): Excellence, Sam Hill, Hawkins Central project manager for Good Union project, Cambridge; highly commended, Russell Smith, NZ Strong project manager for Auckland Airport project
$2.5-5 million (Steel Construction): Excellence, Greg King, Aspec Construction Ltd site manager & cadet mentor for the Bishop Selwyn Chapel at the Holy Trinity Cathedral, Parnell; highly commended, Scott Crowe, NZ Strong project manager for elective surgery centre link bridge at North Shore Hospital, Takapuna
$5-10 million (Hays Construction): Excellence, David Rayson, Aspec Construction site manager & cadet mentor for a Mackelvie St redevelopment, Ponsonby; highly commended, Ben Tomason, Griffiths & Associates project manager for Hora Hora School batch 11, Whangarei
$10-25 million (Colorsteel): Excellence, Jimmy Corric, with NZ Strong project manager for the Mason Bros building, Wynyard Quarter; highly commended, Anthony Tahana, Hawkins Central site manager for Red Stag sawmill, Hamilton; and Chris Murray, LT McGuinness project manager & quantity surveyor for David Jones department store, Wellington
$25-50 million (Allied Concrete): Excellence, Andrew King, Hawkins Wellington project director for the Wellington Airport terminal extension; highly commended, Aaron Stephens, Fletcher Construction project manager for 133 Molesworth St project, Wellington
$50-75 million (Hilti): Excellence, Tony Kavanagh, Arrow International (NZ) project & design manager for the Rototuna Junior & Senior High School, Hamilton
$75-100 million (Metro Performance Glass): no award
Over $100 million (Aecom): Excellence, John Palm, M2PP Alliance–Fletcher Construction project manager for the Mackays-Peka Peka Expressway, Kapiti Coast

Scholarships to encourage aspiration

On top of the awards for past excellence, the institute’s charitable trust awarded its inaugural scholarships aimed at lifting the construction sector’s sights.

The 2 winners of $10,000 cash prizes are Professor Robyn Phipps from Massey University Auckland and Ged Finch, a post-graduate student from the School of Architecture & Design at Victoria University of Wellington.

Trust chair Gina Jones said: “The trust introduced these awards to encourage aspirational thinking with the potential to advance the design, construction or management of buildings in New Zealand, and thereby enhance the quality of our built environment.”

Professor Robyn Phipps.

The scholarships are intended to encourage recipients from a trade, technical or professional role to pursue a project linked to building through research, practice or professional development. There were 15 entries for the inaugural scholarships.

Intention to advance façade engineering

The trust’s awards panel, 3 past presidents of the institute, said: “Professor Phipps has qualifications in building science & architecture and is internationally recognised as a teacher & researcher in a range of building & construction fields. She’s observed the problems faced by both the designers of new buildings and consenting authorities in assessing building façades to ensure they won’t leak and that they perform all the functions required of modern buildings.

“There are a limited number of façade engineers in New Zealand because there are no home-grown courses of study available, so they have had to obtain their qualifications and experience overseas.”

Professor Phipps, an institute member, will use her award to travel to a centre of excellence in façade engineering, to investigate how to deliver building façade training to suitably qualified building practitioners in this country.

She was highly commended in last year’s institute innovation awards for her project on low cost solar heating for schools.

Aim to cut construction waste at end of lifecycle

Ged Finch.

Mr Finch is a student member of the institute who has a bachelor of architecture studies degree and is completing a master of architecture degree. He has worked as an academic research assistant in New Zealand and for architectural firms overseas, and is researching how best to avoid waste at the end of a building’s lifecycle.

The panel said: “This research is significant, given that some 50% of all New Zealand’s waste (amounting to 1.6 million tonnes annually) is generated by the construction sector. His proposition is that planning & designing for the disassembly of buildings at the end of their useful lives has the potential to greatly reduce the quantity of waste produced.

“The award will enable Mr Finch to conduct fullscale tests of structural & architectural systems that have been designed to eliminate construction waste. This will effectively amount to a ‘real world’ test of those systems.”

To be eligible for an NZIOB Charitable Trust award, applicants must be New Zealand residents or citizens and actively involved in the building & construction industry.

The trust wants to offer these scholarships annually and has begun a fundraising programme so the $20,000 scholarship grants are paid from earnings rather than from capital.

Attribution: Awards, institute releases.

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Readymix production over 1 million m³/quarter again

Readymix concrete production was over 1 million m³ again in the June quarter, after the customary March quarter dip.

Statistics NZ’s production graph shows readymix fell just short of 1 million m³ in the June 2007 quarter, at the start of the global financial crisis, hit a low point in the first quarter of 2009 and stayed there for the next 3 years.

Production rose steadily until it passed 1 million m³ in the December 2015 quarter, then dived sharply in the March 2016 quarter. It fell again in the March 2017 quarter, but less dramatically.

Production in the June 2017 quarter was 1.03 million cubic metres, down 2 percent from the June 2016 quarter (when it was at a record 1.05 million cubic metres).

“Ready-mix concrete production has been running above 1 million cubic metres per quarter for over a year, except in March quarters,” construction statistics manager Melissa McKenzie said. “This June quarter, enough concrete was produced to build almost 69 Sky Towers.”

The Auckland region accounted for over one-third of the total – 377,000m³ of the total 1.03 million m³ in the June quarter. Both the national & Auckland production totals fell 2% below the June 2016 level.

In Canterbury, the 176,000m³ of readymix was down 17% from the June 2016 level.

Production nationally was 4.07 million m³ in the June 2017 quarter, up from a low of 2.64 million m³ in the December 2011 year.

Attribution: Statistics NZ release.

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