Mixed picture for commercial building consents – Westpac

5th March 2025 By Staff Reporter | news@propertyticker.co.nz | @propertyticker

Stats NZ’s January 2025 data for consents portray mixed picture for commercial property, says Westpac.

The value of non-residential buildings consented in January 2025 totalled $581m, down from $963m seen for the same month last year. For the year to January, it totalled $7.49bn, down from $8.38bn for the previous 12 months.

“We’re continuing to see large amounts of office space being built or refurbished,” said Westpac after Stats NZ’s monthly building consents data release on Tuesday.

“That’s in part due to ongoing changes in the use of office space, as workplaces adjust to balance both flexible working arrangements and more workers coming into the office on a regular basis.

“However, other segments are looking softer. While there continues to be a large amount of industrial storage space in development, but that’s now easing back off the highs we saw in recent years.”

Westpac said that at the same time, “softness in economic activity has seen the amount of retail and hospitality space in development remaining low”. 

“Feedback we’ve heard from businesses indicates that they remain cautious about significant new capital expenditure in the near term,” stated the bank.

“However, we expect that spending on new premises and other investment activity will gradually rise over the coming year as economic activity recovers.”

On residential, Stats NZ’s figures showed that there were 2,203 new homes consented in January 2025, up 11% compared with January 2024.

“Stepping back from the normal month-to-month swings, the downturn in residential building has now found a floor,” Westpac said.

“After falling sharply through 2022 and 2023, annual consent issuance has now been running at a level of around 34,000 for most of the past year. 

“However, we expect that new housing development will begin turning higher in the latter part of the year as the housing market strengthens.”

Westpac cited Reserve Bank interest rate cuts as supporting “a gradual recovery in the housing market and house prices over the course of this year”.

“And that combination of lower borrowing costs and a strengthening housing market will eventually support a lift in new housing development.”