Source: MIL-OSI Submissions
The boom in new dwelling consents is simply rolling on across NZ and is fully necessary in many parts of the country to meet still-strong population growth and help alleviate upwards pressure on property values. However, Queenstown stands out as an area where this may not necessarily apply (anymore) – indeed, value growth there has cooled rapidly in the past 3-6 months, and although there are also other factors at play (e.g. low affordability, effects on demand of the Foreign Buyer Ban), this signals that construction activity will/should start to tail off. If not, more weakness could lie in store for Queenstown property values.
CoreLogic Senior Property Economist Kelvin Davidson writes:
The latest dwelling consents figures confirmed that the ramping up of construction activity across NZ isn’t finished yet, despite signs of capacity constraints around labour and materials in the industry. For the year to May, there were 34,672 new consents issued, the highest figure since December 1974 and putting us firmly in the midst of one of the three biggest new building booms on record (see the chart in attached). Consents for alterations & additions are also pretty buoyant, albeit the total value for the year to May of $1.77bn was about $90m lower than the peak of $1.86m in the 12 months to July last year.