Fewer building consents are being granted as New Zealand grapples with a construction ‘slowdown’ - except for Rotorua. So what is causing the thermal city to buck the national trend amid increasing interest rates and the cost of living crisis? Kiri Gillespie finds out.

A surge of social housing in Rotorua has resulted in a record number of building consents for new homes, prompting council concern the construction sector may not be able to cope.

The increase in building consents comes despite a nationwide downturn believed to be due to increased interest rates amid the cost of living crisis.

Last year, Rotorua Lakes Council handled 800 new building consents for dwellings. Construction was completed on 410.

Integrated planning and development manager Jason Ward said both results were records for Rotorua.

In 2022, the council handled just under 700 consents, in 2021 there were about 400 and in 2020 there were fewer than 400.

“We are seeing significant interest and investment in residential development in Rotorua including by iwi, retirement housing developers and Kāinga Ora, which has a substantial build programme in Rotorua at various stages in the pipeline,” Ward said.

“Given the growth we’re seeing in housing builds, the main risk for us is whether the construction sector has sufficient capacity.”

Property developer Tony Bradley is among those involved in building Kāinga Ora homes.

“If they weren’t doing what they’re doing we would very much be like Tauranga with low building consents,” he said.

Concerns were raised earlier this month after Tauranga recorded a sharp drop in building consents, prompting fears of a worsening housing crisis.

At the time, Housing Minister Chris Bishop and Building and Construction Minister Chris Penk said Tauranga’s situation reflected a national “slowdown” due to increased interest rates and the cost of living crisis.

Bradley said Tauranga had its highs and lows but Rotorua kept going in the same direction.

Tony Bradley at his Lake Rd Kāinga Ora development, which will bring 20 new homes by May this year. Photo / Kelly Makiha

“Even in the booms, it stays the same all of the way through. There’s development at Ōwhata but most of the activity at the moment is very much Kāinga Ora driven.”

Kāinga Ora Bay of Plenty regional director Darren Toy said there were about 400 Rotorua homes “in the build pipeline through to mid-2025″.

Another 100 homes were in different stages of planning, he said.

Since June 2022, Kāinga Ora has finished about 130 new local homes, including 42 at Quartz Ave and 25 at Ranolf St and Malfroy Rd.

This financial year, about $127m was expected to be spent locally building homes, renewing existing older homes and buying homes built by developers for Kāinga Ora, Toy said.

By the end of June 2025, Kāinga Ora anticipated 330 homes would have been built in Rotorua. These consisted of about 150 homes built by developers for Kāinga Ora, plus redevelopment of about 180 existing Kāinga Ora properties.

Typically, Rotorua’s social housing made up 2 to 3 per cent of the city’s homes. The national average was 4 per cent. Rotorua’s stock included older homes, with an average age of 39 years, Toy said.

About 900 Rotorua households were waiting on the Ministry for Social Development’s Housing Register.

Part of a Kāinga Ora housing development on the corner of Ranolf St and Malfroy Rd, pictured in May 2022. Photo / Andrew Warner.

In response to concerns about capacity, Toy said Kāinga Ora was well-resourced by building partners, “however, we are always monitoring changing market conditions”.

“Like other prudent developers, we constantly review and assess the feasibility of our planned projects to ensure they can still be delivered within budget and that the original business case still stacks up,” he said.

“We put a significant amount of work into the planning, design and consenting stage of a new housing development to ensure that it is of a high quality, meets local regulatory requirements, and fits well within the neighbourhood. That work can be time consuming and market conditions can change as we work through that process.”

Master Builders chief executive Ankit Sharma said that, for the past five decades, the building and construction sector had “traversed an endless boom-and-bust cycle”.

“While this cycle is experienced across the wider economy, the peaks and troughs are far more extreme for this building and construction [sector].”

Sharma said that after the Global Financial Crisis, the industry lost many skilled workers.

“It took seven years to get employee numbers back to pre-GFC levels. We are working hard to avoid a repeat of this scenario so our members can plan with greater certainty which allows them to invest in their businesses and their people.”

There was some optimism returning to the sector but “we’re aware different regions continue to recover from this at different rates”.

In Rotorua, the rise in consents coincided with what Master Builders understood to be more willingness by the council to adopt medium-density residential standards in its planning, allowing for higher-density dwellings, Sharma said.

This was good for builders because it meant work, and good for communities because it meant affordable housing, Sharma said.

Bay of Plenty regional director of Kāinga Ora Darren Toy. Photo / Andrew Warner

Jean-Paul Gaston, council general manager district development, said previously, it tended to deal “with just a handful of local developers, including landowners like farmers looking to develop”.

The council was now dealing with 20 or more developers, including those based elsewhere “who have traditionally focussed on the likes of Tauranga and Taupō” but were now active in Rotorua, he said.

“We are working with developers and landowners on numerous large residential development opportunities (20 houses or more) and that includes inner-city residential developments and large rural papakāinga development,” Gaston said.

As suggested by Sharma, Gaston said developers were making use of the medium-density planning provisions. There was also an increase in developers looking at affordable rental developments “with many waiting to see if there will be support from the Government around this”, he said.

“Part of the trend we’re seeing in Rotorua is down to timing of decisions and Rotorua [is] now starting to catch up in terms of supply to meet the demand. This means we now have a solid pipeline of housing coming through.”

Kiri Gillespie is an assistant news director and a senior journalist for the Bay of Plenty Times and Rotorua Daily Post, specialising in local politics and city issues. She was a finalist for the Voyager Media Awards Regional Journalist of the Year in 2021.