Falling construction costs rather than a reduction in size is the likely reason for a drop in the average value of new apartments consented in Auckland

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Cheaper apartments could be on the way for Aucklanders as construction costs start to decline.

According to the latest building consent figures from Statistics NZ, the average value of building consents issued for new Auckland apartments has been in an almost steady decline for the last 12 months.

In the second quarter of last year the average value of new building consents issued for new Auckland apartments was $451,050, and it then declined in three of the four following quarters.

By the second quarter of this year, the average value per consent had dropped to $278,222, the lowest it has been since the third quarter of 2015.

The decline in average value appears to have been driven by a fall in construction costs rather than a reduction in the average size of apartments being consented.

For the last two years, the average size of apartments consented in Auckland has been largely stable at around 100 square metres, and in the second quarter of this year it was 110 square metres.

But over the last 12 months, the average value per square metre has declined form $5334 per square metre in the second quarter of last year to $2529 in the second quarter of this year, which was also the lowest it has been since the third quarter of 2015.

So over the past year there has been a reasonably clear trend of a drop in the average cost per square metre, bringing down the average total building costs of apartments (building consent values exclude the cost of land and other non-construction costs such as finance, legal and marketing expenses).

That reverses the trend of the previous 12 months, where rising costs per square metre had been pushing up the average total value of new apartment consents.

That suggests there has been shift towards the more affordable end of the market in new projects being brought to market by developers over the last year or so, as buyers became more price conscious.

Looking at the numbers on an annual basis, which removes most of the quarterly volatility, the average cost per square metre declined from $3627 in the 12 months to June 2017, to $3364 in the 12 months to June this year, a decline of 7.3%, pushing the total average value of new apartment consents down from $364,082 to $334,463.

However apartments remain an expensive building option compared to stand alone houses or low rise multi unit housing such as townhouses and home units.

In the March quarter the average cost of new apartments consented in Auckland was $2529 per square metre, compared to $2116 for stand alone houses, and $2188 for townhouses and home units.

And although the average size of stand alone houses consented in Auckland has been declining, at 213 square metres the average new house is nearly twice as big as the average new apartment and remains the most expensive building option, with an average total consent value of $450,380.

New Apartment Consents Issued in Auckland Q3 2016 – Q2 2018

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