Consents for new home builds remain high, but levelling off

Hallenstein Glasson’s annual profit fell 23% after Covid-19 lockdowns hurt trading at its clothing stores.

The retailer, which owns the Hallenstein Brothers and Glassons clothing chains, said profit in the year to August 1 fell to $25.6 million from $33.3m the previous year. That’s ahead of its forecast for profit of $23.9m to $24.9m.

Hallenstein Glasson lost 5432 trading days in the first half of the year as a result of Covid-19 lockdowns across New Zealand and Australia. Sales fell 6.2% in the first half but rebounded 6.6% in the second half when all the stores remained open, ending the year flat at $351.2m, the company said.

‘‘To achieve sales on par with the prior year was pleasing given the numerous challenges faced in the year,’’ said chief executive Stuart Duncan.

The trading environment remained difficult in the second half as Omicron surges impacted staffing and customers shopping habits, particularly in the New Zealand market, he said.

Glassons New Zealand sales fell 13% to $104.4m, with profit down 65% to $4.1m. In Australia, Glassons sales rose 17% to $156.9m, with profit up 16% to $19.1m.

At Hallenstein Brothers, sales across both countries slipped 7.5% to $89.9m, while profit fell 57% to $2.1m.

Online sales across the group increased 16%, particularly when stores were closed, Duncan said. They now account for 27.88% of total sales, up from 24.04% in the prior year.

Consents for new homes have flattened off, but at near record levels, and this should support strong housing construction for the next year, experts say.

There were 50,653 new homes consented in the year ended August, up 8.9% on the same time last year, Stats NZ’s latest figures show.

But that figure was well down on May, when a record high of 51,015 consents were issued.

On a seasonally adjusted basis, consents have been volatile recently. They were down 1.6% in August, after a 5% increase in July and a 2.2% fall in June.

Stats NZ construction and property statistics manager Michael Heslop said consents remained at high levels in most regions, particularly Canterbury which hit a new annual record.

There were 8691 consents issued in Canterbury, in the year to August, an increase of 23% on the same time last year.

That meant consents in the region were now well above the postearthquake rebuild peak of 7308 in the year ended December 2014, he said.

Northland and Southland also hit new annual records with 1549 and 485 respectively, while consents in Wellington were up 18% to 3875. Auckland had the highest number of consents at 21,463, up 7.7% on last year.

Heslop said the annual increase was driven by multi-unit homes, which included townhouses, apartments, retirement village units, and flats, and consent numbers could fluctuate from month to month due to large multi-unit projects.

But Westpac senior economist Satish Ranchhod said while annual consent issuance remained elevated, on a monthly basis consents had been tracking sideways for a year.

‘‘There has been some month-tomonth volatility associated with ‘lumpy’ categories like retirement villages, but consents have failed to rise meaningfully above 4200 a month for any sustained period.’’

The construction sector was facing challenges, including falling house prices, rising interest rates and building costs, labour shortages, and buyer hesitancy, he said.

‘‘The related pressure on margins is likely to be a key reason for the low levels of confidence in the building sector.’’

In the latest ANZ Business Outlook Survey, residential construction intentions dropped to a new alltime low of negative 76.5 in September, down from negative 65.0 in August.

Ranchhod expected the tougher financial conditions would lead to consents trending down, but that the slowdown in actual construction would be gradual as building activity had not kept pace with the rise in consents.

‘‘There is still a large pipeline of planned projects. And while the scope for significant increases in building activity looks limited, the level of construction activity is likely to remain firm into the new year.’’