Unpacking building-related statistics

This article looks at the relationship between two key building-related releases from Stats NZ – which are regularly published in Under Construction – and what they tell us about building activity in New Zealand

Stats NZ has two regular information releases directly related to construction: Building consents issued (published monthly) and Value of building work put in place (published quarterly).

The first contains information about the types and values of building consents across New Zealand. Building consents include work on new buildings and alterations and additions to existing buildings, excluding demolitions and work valued under $5,000. The second estimates the dollar value and volume of construction work undertaken each quarter, which is also known as building activity.

How do we get the data?

Building consent data is provided by territorial authorities, which is then collated and analysed for publication each month.

Information about building activity on high value and complex building projects is collected via a quarterly postal survey. In the final quarter of 2016, about 2,500 building projects were included in the survey. This is supplemented with estimates modelled from building consents.

What is the relationship between building consents and building activity?

Building consents reflect an intention to build, while building activity starts after the consent is issued. Over 95% of consented building work is constructed.

Stats NZ doesn’t forecast building activity, but understands that as both the number and value of consents changes, building activity will follow a similar pattern over time.

Building activity value differs from building consent value in the same period, mostly due to the time lag in completing the work. For typical residential buildings, two-thirds of the building activity value is completed within six months, and most within 12 months of the consent. Multidwelling consents, such as apartments and retirement village units, generally take longer to complete than stand-alone houses.

The building activity value is also higher, on average, than the building consent value, even though the consent value includes GST while activity does not. For new dwellings, building activity value is, on average, only slightly higher than the consent value. However, for residential alterations and additions, building activity value may be around 30% higher than the consent value.

Work on residential buildings accounts for over 60% of total building activity value – the remainder is non-residential. Within residential building activity, over 80% of the value is for work on new dwellings.

Building activity volume

The value of building activity extrapolated from TA information includes inflation, so hides real changes over time. To exclude the effects of price changes, Stats NZ building activity volume expresses the value in September 1999 quarter prices. The value is deflated using the capital goods price index for residential construction or nonresidential construction, as applicable.

The price indexes are at the national level only, so regional building activity volume cannot be calculated.

Building consents value

In 2016, the value of consents for all buildings was $18.6bn, up 13% from 2015. This comprises $12.5bn for residential buildings (up 19%) and $6.0bn for non-residential buildings (up 1.7%).

Building activity value

The value of building activity has been increasing for more than five years. For 2016, the value of work on all buildings was $19.9bn, up 20% from 2015. This includes $12.6bn for residential buildings (up 22%) and $7.2bn for nonresidential buildings (up 17%).

Consent stages for large building projects 

Most large projects have several building consent stages issued over time. Stage descriptions include site works, foundations, piling and inground services, building superstructure, external envelope / cladding, and fit-out.

The additional value for each consent stage is included in the Stats NZ figures published in Under Construction, but the floor area is only counted once, using the building site address to link the project stages.

For staged residential buildings, such as apartments, the number of new dwellings is counted once at the stage of greatest value, usually the fit-out. This means that for apartments there may be consent values but no new dwellings or floor area in the monthly data. Longer-term data, ideally annual, gives better estimates for the average value and floor area of apartments.

Retirement villages include both residential and non-residential buildings, with dwellings owned by residents, often with a ‘licence to occupy’, considered residential. The non-residential buildings include shared dining and communal areas, along with any healthcare facilities and care beds.

Prisons, hostels, boarding houses, hotels, motels and other accommodation buildings are classified as non-residential buildings.

Residential building consents

The value of residential building consents was $12.5bn last year, up $2.0bn (19%) from the previous year. In recent years over 80% of the value has been for new dwellings, and the remainder for alterations and additions to existing buildings.

New dwelling consents 

In 2016, the number of new dwellings consented reached levels not seen since 2003/04. The number has more than doubled since the low point in 2011. However, it is still well below the peak of the early 1970s.

There were 30,066 new dwellings consented in 2016, up 2,934 (11%) from 27,132 in 2015. This is the fifth consecutive year of double-digit growth. More recently, the trend for new dwellings decreased 15% in the five months to January 2017. In recent years, 70–80% of all new dwellings consented were houses.

New houses

There were 21,310 new houses consented in 2016, up 12% on 2015, while 60% of all new houses were consented in Auckland, Canterbury, and Waikato.

Residential building activity

The value of building activity for new dwellings last year was $10.5bn. Alterations and additions were worth $2.2bn, making a total of $12.6bn. We can compare new dwellings consented (a volume measure) to residential building activity volume. Residential building activity is less volatile than new dwelling consents, but they follow a similar pattern, as shown in the graph below.