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stats watch
Statswatch – Sept 2021
THE SEPTEMBER STATS show continued records being set for residential consents with concerns about risk and debt also growing.
• Risk may magnify if the cost of borrowing becomes an issue
for those who have over-extended.
• Non-residential dampens September consents.
SEPTEMBER RISK DATA
Our regular data series from CreditWorks Data Solutions (www.creditworks.co.nz) assesses the level of credit risk posed by the four business sectors most closely associated with our chosen industry:
• Hardware, Building & Garden Supplies Retailing
• Core Retailing
• Residential Construction
• Commercial Construction
In our last update reporting on the August month, we noted businesses that were previously in the “very low risk” categories were starting to show payment stress, alongside an aging out of average DSO debt.
Now, armed with September’s risk data, CreditWorks’ Alan Johnston comments: “The difficulties facing the building industry have been well documented in recent months.
“Aside from the obvious limitations enforced on building from a Covid-19 standpoint – particularly in our largest metropolitan area – cost increases, a lack of availability
of most building materials, and chronic delays in gaining consents are all providing challenges to the industry.
“These are also factors in the rising inflation rate we are experiencing, which is putting pressure on borrowing costs.”
Despite these headwinds, the building industry is still showing high levels of activity and, while many projects have been delayed or seen costs blow out, construction is still seeing exceptional growth.
“Nevertheless,” warns Alan Johnston, “rising debt costs may become an issue and, while from an historical perspective interest rates are still relatively low, we are yet to see who may have over-extended themselves in regard to borrowings at this point.”
As a result, risk to the construction industry may magnify, and we are already seeing a slight upward movement through the various risk bands in both Residential and Commercial Construction (see charts opposite).
As far as our other two sectors of interest are concerned, there has been little change to the risk profiles for Core Retailing and Hardware, Building & Garden Supplies Retailing (see charts opposite).
This may be thanks to consumers going online, clicking & collecting during lockdown and/or Covid-19 restrictions, so retail sales remain relatively high and risk relatively low in
these areas.
Data for October’s risk data will be posted online first
so look to www.harwdarejournal.co.nz for early notice of changing risk profiles.
SEPTEMBER BUILDING CONSENTS
The latest consent data from Stats NZ (www.stats.govt. nz) shows that growth in the value of residential consents reverted to the mid-20%s after the mega growth seen in August.
The value of non-residential also dropped for the third time this calendar year, dragging back the growth in overall value once more.
Consents by value for the September month were as follows:
• Residential: $1.9 billion (+26.1% on Sept 2020). • Non-residential: $605 million (–20.2%).
• Total: $2.6 billion (+11.2%).
By volume, 4,483 new dwellings were consented in the month (+24.4% on Sept 2020), of which 49% were standalone houses, 35% townhouses, flats & units, 10% apartments and 5% retirement village units.
Year to date September 2021, consent values were as follows:
• Residential: $20.1 billion (+26.4% on YTD Sept 2020). • Non-residential: $7.7 billion (+10.3%).
• Total: $27.8 billion (+21.5%).
In the year ended September 2021, 47,331 new dwellings were consented, +25.4% on YTD September 2020, led by Canterbury (+31%), Auckland (+29%) and Rest of North Island (+29%), Waikato (+23%), Wellington (+13%), and Rest of South Island +10%.
21,886 multi-unit homes (townhouses, flats & units, apartments and retirement village units) were consented in YTD September 2021, +40% on the previous year, while the number of new standalone houses consented was +15%.
In the year ended September 2021, the number of new dwellings consented per 1,000 residents was 9.3, compared with 7.4 in the September 2020 year.
YTD September 2021, growth in the value of non- residential building consents was driven by education buildings (+40%), factories (+45%) and offices, administration & public transport buildings (+3%).
Stats NZ’s October 2021 building consent data is released on 1 December, with the September quarter’s Value of Building Work put in Place scheduled for release on 6 December.
Look to www.hardwarejournal.co.nz for the most timely updates.
MORE AT www.facebook.com/nzhardwarejournal
NOVEMBER 2021 | NZHJ 13