New Zealand building consents fell 0.8 per cent last month as a decline in the number of new permits to build apartments undermined growth in intentions to build new houses.

New dwelling consents fell to a seasonally adjusted 1,712 in July from 1,726 a month earlier adding to a 4.3 per cent decline in June, according to Statistics New Zealand. Stripping out apartments, new permits issued climbed 3.1 per cent to 1,561, turning positive for the first month since April.

On an unadjusted basis, new residential permits climbed 28 per cent to 1,893 from July 2012, and were up 35 per cent excluding apartments to 1,675. Annual residential building permits climbed 22 per cent to 19,146, and were up 23 per cent to 17,354 without apartments.

Property markets in New Zealand's two biggest cities, Auckland and Christchurch, have been underpinning national increases as a lack of supply and heightened demand fuels higher prices. The heat prompted the Reserve Bank to impose limits on the level of low-equity bank lending as a means to alleviate some of that pressure.


Today's figures show Auckland reported the biggest increase in new dwelling permits, rising 148 to 556 from a year earlier, Canterbury rose 136 to 507, and Wellington increased 54 to 169.

The value of non-residential building consents rose 23 per cent to $425 million in July from a year earlier, and across all buildings, rose 30 per cent to $1.12 billion.

Michael Gordon, senior economist at Westpac Bank said the main uncertainty in the July figures was around how the pace of consents would hold up in Christchurch, after the city council was stripped of its accreditation to issue consents.

"The answer was: pretty well. We estimate that in seasonally adjusted terms there were 183 housing consents issued in Christchurch - still the second highest month on record, after the 198 consents issued in June," he said.

"In Auckland, the other key region of housing under-supply, consents rose to their highest level since late 2006. That said, the pace of new home construction is probably still lagging behind what is needed to meet population growth. Non-residential building consents rose to $425m in July. This series is volatile from month to month, and strongly influenced by large projects, but the underlying trend has been solidly upward over the last two years."

Christina Leung, an economist at ASB Bank, said it was encouraging to see earthquake rebuilding gaining momentum, despite problems in the Christchurch City Council consent issuing process.

"The July result suggests the disruption has been limited, and we expect longer term capacity issues will be resolved," she said. "We expect earthquake rebuilding in Canterbury and stronger house-building demand in Auckland will continue to drive stronger residential construction over the coming years."

The recovery in non-residential construction demand had been more gradual, but there were signs this was now picking up, Leung said.


"In particular, consent issuance for office buildings is trending higher. We also expect earthquake rebuilding will be a key driver of stronger non-residential construction over the coming years, with the large amount of earthquake strengthening required in Wellington providing an added boost."

- with NZ Herald Online