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RMBA says tale of two cities well entrenched

RMBA says tale of two cities well entrenched

The latest residential building consent figures released today show the demand for new homes continues to rise and is almost double the March 2011 low point but still someway off its peak in January 2004. Statistics New Zealand figures released today showed 1,999 new dwelling and apartment (186 apartments) consents issued in March 2014.

RMBA CEO Warwick Quinn says that the overall trend has stabilized somewhat with around 5500 consents issued quarterly. While Auckland and Canterbury make up 57.5% of all residential activity the Canterbury region now out performs Auckland notwithstanding Auckland’s population is almost three time larger. In the first quarter of 2014 Auckland issued 1458 residential consents and Canterbury 1654.

Quinn says, “this is understandable to some extent given the rebuild is underway but it is also partly as a result of Auckland underperforming”. He says, while it is pleasing to see Auckland’s new housing activity better than it was on a per capita basis it has been building below par at about 4.1 new homes per 1,000 people. In 2013 the national average was 4.7 new homes per 1,000 people and Auckland was 9th out of the 16 regional areas. With this level of performance you can see the urgency and change needed to arrest house price increases in Auckland and the requirement to release cheap affordable land to encourage construction to increase supply.

Mr Quinn says he expects continued growth in 2014 and still believes a 10% lift on 2013 levels is achievable to about 23,500 new residential consents. However, he says there are some head winds ahead with the Reserve Bank likely to continue to raise the official cash rate and the usual slow down around election time. He expects interest rate increases will affect regional areas the most where pent up demand is not as high and it will be interesting to see whether demand in Auckland is strong enough to withstand mortgage increases through 2014.

ENDS

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