The value of building consents issued last month was the highest ever for May, but building activity is still weakening.
Statistics NZ said yesterday that $670 million worth of residential consents were issued in May, up 25 per cent on May last year. Non-residential consents, for $388 million worth of
work, were 15 per cent ahead of those in May last year.
The big contributors to the non-residential sector were shops, restaurants and taverns, followed by offices and administration buildings.
"Both residential and non-residential building recorded their highest values for a May month," Statistics NZ said.
But the number of building consents issued in May last year was lower than usual because of the introduction of changes to the Building Act.
The number of apartments being built has declined. Apartments accounted for 9 per cent of all new dwelling consents issued in May this year, compared with a monthly average of 13 per cent for the year to May, Statistics NZ said.
Shamubeel Eaqub, economist at Goldman Sachs JBWere, said residential consents had been on a modest downward trend, but were high by historical comparisons.
"As the housing market cools and house price expectations become more realistic, we would expect the speculative demand in the housing market to also cool," he said.
Introduction of regulation changes in May last year made annual comparisons meaningless, he said.
Non-residential consents had been reasonably robust at above-average levels. This market had peaked late last year, he said.
Tim Bowring, economist at Macquarie Bank, said the latest data confirmed expectations.
"We remain firm on our view of a lacklustre residential market for the remainder of this year," he said.
"The year-average growth rate ... shows that building consents remain 10 per cent lower than the same period last year.
"Monthly approvals appear to have stabilised at about 2000 per month levels. However, the question remains whether approvals will take another step down once higher interest rates filter through to fixed-rate mortgages this year," Bowring said.
