Building consents continued to rise in September but the
Registered Master Builders Federation remains concerned about
future building activity as loan-to-value (LVR) ratios start
The Reserve Bank LVRs came in on October 1 as the central
bank tried to dampen down housing activity. Retail banks are
reporting fewer mortgages being issued at less than a 20%
Statistics New Zealand figures show 1860 new home and
apartment consents were issued for the month, the third
highest month of the year.
The September figures were bolstered by a record month in
Canterbury, where 599 consents, valued at $60 million, were
issued - the highest in the region since records began in
Federation chief executive Warwick Quinn said the overall
result was positive and showed the rebuild in Canterbury was
The national growth was being driven by Canterbury and
Auckland, which now had 58% of all new home activity.
Activity in those two markets had been growing steadily for
the last 12 months to 18 months and was expected to continue.
''While we like to see the consent figures rise, we have to
be careful not to get carried away with the increase without
appreciating the vagaries within it.
"We have been predicting for a couple of years now 'the tale
of two cities', with Auckland and Canterbury dominating the
new home construction. This is playing out now, well and
Regions were faring better but it was still tough in the
South Island outside Canterbury. Mr Quinn was concerned about
the impact of the Reserve Bank's LVR policy on new home
construction activity in coming months.
He was aware of building companies whose inquiry levels had
dropped significantly and potential clients had been lost as
they were unable to obtain finance due to insufficient
''While the banks will still lend on new construction, it
appears many potential new-build clients are either not able
to obtain mortgages, or now no longer believing building is
an option and not bothering to inquire.''
The impact of LVRs would not be immediately apparent, as
statistics for consents had been locked in for several
months. For LVR policy to be effective, supply must be
Any reduction in supply was counterproductive to keeping a
lid on property prices, Mr Quinn said.
G. J. Gardner, one of New Zealand's largest home builders,
said the loan restrictions had cost it 24 new-home builds in
the first month alone and it expected more.
The firm's 27 franchises built 700 homes last year and
expected to build 950 this year. But 11 franchises confirmed
they lost a total of 24 deals as a direct of the LVR
Westpac senior economist Michael Gordon said the pace of
consenting in Christchurch had clearly taken a step up in the
last months, perhaps reflecting Government pressure to speed
up the rebuild process.
''In contrast, consents in the under-supplied Auckland market
remain worryingly subdued. While the number of consents in
September was up 7% on the same time last year, the pace has
slowed markedly in recent months.''