Building consents hit nine-year low as home construction slumps

New Zealand building consents sank to a nine-year low in January as construction of new homes fell.

The value of consents for all buildings fell 11 per cent to $537 million from the same month a year ago to the lowest value for any month since February 2002.

Permits for residential construction fell 19 per cent to $309 million, according to Statistics New Zealand. The residential decline was the seventh straight slide and the lowest value since January 2002.

Some 867 new dwellings permits were issued in January, down 17 per cent from the same month in 2010, and the second-lowest figure since the series began in 1965.

Stripping out the volatile apartment permits, there were 777 dwellings approved, a 22 per cent decline. The data pre-dates the February earthquake in Christchurch, which has killed at least 166 and caused as much as $15 billion worth of damage.

"The outlook for consent issuance, and the construction sector more generally, is dominated by eventual remedial work associated with the Christchurch earthquakes," said Philip Borkin, economist at Goldman Sachs.

"We expect the earthquakes will have a negative influence on construction activity in the near-term as focus is on rescue and damage assessment."

New Zealand's property market has been in a rut over the past year as dwindling migration and a focus on repaying debt has households tentative about getting back into housing. House sales falling to a record low in January, according Real Estate Institute data.

Still, new commercial construction permits bounced back in January, with the value of consents rising 2.3 per cent to $228 million. Factories and industrial buildings were the biggest contributor at $57 million, while new education buildings were worth $50 million, and approved social, cultural and religious buildings were valued at $25 million.

Borkin said he doesn't expect building consent issuance to pick up until next year, though it will probably become a less relevant gauge for future construction activity with the quake reconstruction and leaky buildings crisis not involving the consent process.