Monday 4 July 2005

What do consent figures tell us about the property boom?

The number of Building Consent applications for new homes has plummeted (Bob Dey has figures here), prompting some speculation that the property boom is turning south. Maybe so, but I wouldn't be making those predictions based on these figures alone.

Fact is, there are a lot of other reasons for consent figures to plummet, most of them involved with out of control red tape flowing on from the leaky homes hysteria:
  • the many, many changes to the building code, which taken together have delayed the preparation of plans to be submitted for consent ;
  • the legion of associated uncertainties with these code changes, particularly as to who shoulders the risk should the prescribed methods, materials and details fail;
  • the long, long, loooong delays in getting consents processed;
  • the lengthy lead-times just to get an appointment to submit your consent application;
  • the number of builders and developers who have chosen to leave the industry because of much of this nonsense, a number which anecdotal evidence suggests is high.
Given all these impediments, it seems to me that you shouldn't take a drop in consent figures alone as evidence of an end to the boom, no matter the size of the decrease.

2 comments:

Anonymous said...

I agree that consents per se don't mean terribly much. Of course or dear pundits who have been calling Armageddon for the last 5 years (including Gareth Morgan) jump on any whiff of bad news, no matter how irrelevant, to back-up their laughable forecasting abilities.

I would be worried about apartments, that's all.

Aaron Bhatnagar said...

On a side note, I see in today's public notices that Richard Priest Architects Ltd have gone into liquidation. Richard Priest was one of Auckland's more prominent architects, do you have any idea what happened there Peter? My instincts tell me that architects would only do this in a property boom to pre-empt any comeback over leaky homes?