Building consents hit five-year high

Building consents hit a five year high in the June quarter, says Statistics NZ. Photo / Mark Mitchell

New Zealand new home building consents fell in June though the decline wasn't enough to prevent growth in the second quarter from reaching a five-year high, government figures show.

New dwelling consents fell 4 per cent, seasonally adjusted, in June from May, when they gained 1 per cent, according to Statistics New Zealand. The latest two months followed a 21 per cent surge in April, which accounted for the strong quarterly showing. In the 12 months ended June 30, consents were up 25.5 per cent from a year earlier.

This month Reserve Bank governor Graeme Wheeler linked the heated housing and construction market with the timing of interest rate hikes, saying his response would "depend largely on the degree to which the growing momentum in the housing market and construction sector spills over into inflation pressures." More imminent will be the release of central bank constraints on high loan-to-value mortgages, part of its enlarged toolkit for tackling bubbles in the economy.

In the June quarter, there were 5,213 new dwellings consented including apartments, the highest since the second quarter of 2008. Excluding apartments, there were 4,620 new dwellings consented, the highest since March 2008.

The government statistician's trend series for new homes including apartments has increased for 27 straight months.

Excluding apartments, which can be a volatile part of the data series, new dwelling consents fell a seasonally adjusted 4.5 per cent in June from May.

Auckland and Canterbury retained their dominance of the national data, at 822 new dwellings last month, or 55 per cent of the national total. In Auckland, consents jumped by 189 to 453 in June from the same month last year, though they were down 28 per cent compared to May this year. In Canterbury the number rose 73 from a year earlier to 369.

The value of total residential building consents was $531 million in June, down from $726 million in May. Non-residential consents were worth $269 million, down from $434 million in May.

ANZ Bank senior economist Mark Smith said the climb in residential construction costs per square metre remained "a clear signal of the resource requirements of the construction sector", but the Reserve Bank would be hoping this did not filter through into wider inflationary pressure necessitating more aggressive Official Cash Rate moves.

"The upward trend in residential consent issuance has followed that of general housing market activity, said Smith. "We expect a more prolonged expansion dictated by usual cyclical dynamics."

While construction work was picking up in Auckland it was "well below levels needed to assuage pressures on existing capacity let alone meet future needs, while the $40bn Canterbury rebuild represents a large and ongoing call on construction sector resources."

Westpac economist Michael Gordon said the June fall in residential building consents was in line with the bank's assumption, "although consents were more skewed than we expected towards apartment units - a segment that has shown more signs of life so far this year, though is still running well below pre-recession levels."

Consents for new homes were particularly strong in Christchurch, during what proved to be a turbulent month, said Gordon.

- with NZ Herald