By Alex Tarrant
The number of building consents issued in February 2011 for all dwellings fell by 9.7% from January to their lowest level since January 2009, Statistics New Zealand said today.
The fall was bigger than economists had expected, with ANZ saying before the release that the market was expecting a 1% fall after a rise of 9.1% (revised from 9.6%) in January from December.
The downward trend in consents since April 2010 mirrored an economy that struggled and grew smaller in the third quarter of last year, before bouncing back in the fourth quarter ever so slightly to show flat growth in the second half of 2010.
JP Morgan economist Helen Kevans said she suspected the downtrend in consent issuance would continue in the wake of the February 22 earthquake in Christchurch, given the slow rate at which earthquake-related insurance claims were being processed.
"Indeed, earthquake-related rebuilding cannot get underway until claims have been processed by insurers, and this process has been delayed by a lack of information on land remediation, which aims to prevent lateral spreading of any future quakes," Kevans said (see her full remarks below).
Two year low
Seasonally adjusted consents for all dwellings – houses and apartments – fell 9.7% to 1,007 in February, the lowest figure since January 2009.
Excluding the volatile apartment category, consents for new houses fell 7.8% to 923 s.a., the lowest since February 2009, Stats NZ said.
“Looking at the longer-term trend, the number of new houses authorised, excluding apartments, has continued to decline, and is down almost a third since the recent peak in March 2010,” Government Statistician Geoff Bascand said in a media release.
“The trend is similar when apartments are included – it has declined 26% since April 2010,” Bascand said.
Unadjusted figures show 884 consents for dwellings, excluding apartments, in February 2011, down 35.1% from February 2010.
There were 89 consents for apartment units in February, up from 13 in February 2010. Stats NZ warns the apartment category can be extremely volatile.
Unadjusted figures also showed 148 new dwellings were authorised in the Canterbury region in February, 101 fewer than the same month a year ago. This was the largest year-on-year fall for any region, Stats NZ said.
“It is not possible to say how much of this fall was due to the earthquake on 22 February, but all consents authorised during the month have been included,” Bascand said.
Consents for three new dwellings in Canterbury were due to the September 4 earthquake that struck the region, with 13 other consents from other categories recorded as due to that quake.
Here is the reaction from JP Morgan economist Helen Kevans:
The permits data recently has been particularly volatile, but the underlying trend has been one of decline over the past year. The trend for the number of new dwellings authorized has fallen 26% since April 2010, and is 31% lower excluding the most volatile apartments category.
We suspect this downtrend will continue in the wake of the most recent earthquake in Christchurch on February 22, given the slow rate at which earthquake-related insurance claims are being processed. Indeed, earthquake-related rebuilding cannot get underway until claims have been processed by insurers, and this process has been delayed by a lack of information on land remediation, which aims to prevent lateral spreading of any future quakes.
In February, 148 new homes were authorizedin Canterbury, 101 less than a year earlier. Statistics New Zealand highlighted, however, that it was not possible to estimate how much of this fall was due to the February quake. Furthermore, very few building consents were identified in February as related to the previous earthquake that hit Canterbury in September 2010. Only 16 consents relating to the September earthquake were identified, a very small portion of the 973 permits authorized over the month. Of the 973 permits authorized in February, 884 were for dwellings and 89were for apartments.
Non-residential permits rose 32%m/m in value terms in February, but fell 13% based on floor space. Over the year, the value of non-residential permits fell markedly (-19%oya), owing to sharp declines in social, cultural, and religious buildings, education buildings, and offices and administration buildings. These permits have stepped down significantly after spiking to an 18-month high in November. It seemed back then that firms and government bodies were pushing through rebuilding projects faster than individual households in the wake of the September earthquake, although this dynamic was short-lived.
The chart below tracks unadjusted figures.
(Updates with JP Moprgan comments)