Report from BusinessDesk by Paul McBeth
New Zealand building consents bounced back last month, signalling a flurry of new construction intentions in Auckland’s residential property market.
The number of new dwellings approved, excluding apartments, rose a seasonally adjusted 7.1 percent to 1,123 in October and was up 11 percent including volatile apartment issuance, Statistics New Zealand said in a statement. A 46 percent increase in the number of permits to build in Auckland underpinned the national gain.
That turns around last month’s sharp decline in issuance, and is the seventh monthly gain this year. Still, total residential building consents have dropped 15 percent in the year ended Oct. 31 to 4,864, and a 6 percent decline in the annual value of new building to $3.75 billion.
“The current pace of consent issuance is up slightly from lows recorded over the first half of 2011, but remains at extremely weak levels,” ASB economist Jane Turner said in a note. “Over the coming year, we expect to see underlying demand for housing construction to increase, supported by tight housing supply, rising house prices (particularly in Auckland) and low interest rates.”
The country’s biggest city is one of the few regions to show a marked improvement in the property market over the past two years, with values just below the late 2007 peak according to the latest Quotable Value report, bumping up the national average. New Zealand’s nationwide housing market has struggled to recover from last year’s trough amid tepid demand for property as households use record low interest rates to repay debt rather than take on a mortgage.
The value of non-residential building consents issued rose 1.5 percent to $276 million in October, led by an $18 million increase in the value of office and administration building consents to $43 million. The annual value fell 1.6 percent to $3.69 billion in the year ended Oct. 31.
“The rebound in commercial construction intentions seen in the latest business confidence survey indicates businesses are feeling confident enough about demand over the coming year to plan for an expansion of operations,” Turner said.
The value of all building consents issued rose 7.1 percent to $736 million in October, and was down 9.7 percent to an annual $8.56 billion.