Building consents for new houses, excluding apartments, fell 1.3% in January, according to Statistics New Zealand

Building consents for new houses, excluding apartments, fell 1.3% on a seasonally-adjusted basis in January, according to Statistics New Zealand.

The fall was not unexpected, given that it comes following very strong, double-digit, rises in activity in both November and December.

If the volatile apartment figures - which rise in and fall a lot from month-to-month - are included, the seasonally adjusted number of new dwellings consented fell 8.3% in January.

“Apartment numbers returned to a lower level in January, after recording high numbers in November and December,” Stats NZ's industry and labour statistics manager Blair Cardno said.

Stats NZ said the "trend" for new dwellings, excluding apartments, was at its highest level since January 2008, and was 79% higher than the most-recent low point in March 2011. However, it was still 24% below the series maximum in September 2003.

Together, Auckland and Canterbury accounted for 58% of the new dwellings. In Auckland, 433 new dwellings were consented, while 520 new dwellings were consented in Canterbury.

ASB economist Daniel Smith said  Auckland and Canterbury saw lower consent issuance in January but continued to strengthen on a trend basis.

"For instance, Auckland consents were around 20% below the December level according to our seasonally-adjusted estimate, but were still 15% above the levels seen October. The three-month moving average for both regions continued to rise as well, reaching the highest level since 2006 in Auckland and the highest level on record in Canterbury."

Smith said although the overall national figures were slightly weaker than the previous month, January’s data on consent issuance pointed to continued strength in the construction outlook.

"The main drivers of increased building activity will be the Canterbury rebuild and house-building demand in Auckland. Both regions have shown very strong growth in consent issuance over recent months. Greater building activity will be a double-edged sword for the economy. More construction will ease pressures in the housing market, where supply shortages have pushed up prices in Auckland and Christchurch. But higher activity will create more competition for resources and additional inflationary pressure. So far, the evidence is that construction costs (and labour costs within the sector) remain relatively contained."

But Smith said that with inflationary pressures likely to grow as activity continues to ramp up, ASB economists expected the Reserve Bank to begin "a gradual cycle" interest rate hikes next month.

In January, consents were issued for 1640 new dwellings. This comprised:

• 154 apartments (including 88 retirement village units)
• 1486 non-apartment dwellings.

A total of $930 million of building work was consented. This consisted of:

• $642 million of residential work
• $289 million of non-residential work.

Data for building consents is obtained from all territorial authorities in New Zealand.

Compared with the same month last year the January consents figures, excluding apartments, were up 26%, while including apartments, they were up 25%.

Including apartments, 13 of the 16 regions consented more new dwellings in January 2014 than in January 2013.

The regions with the greatest increases were:

• Canterbury – up 142, to 520 (including 27 apartments)
• Auckland – up 61, to 433 (including 68 apartments)
• Wellington – up 35, to 127 (including 59 apartments)
• Waikato – up 33, to 137.