BusinessDesk: New Zealand building consents extend gains in August

By Jason Krupp

New Zealand building consents rose for a fourth month, boosted by a rise in applications for temporary structures to house Christchurch residents made homeless by the February earthquake.

The number of new dwellings excluding apartments authorised in the month rose 16% to a 1,210 on a seasonally adjusted basis compared to July, according to Statistics New Zealand.

That was bolstered by 57 earthquake related consents, 50 of which were for relocatable dwelling units, although the department said the data now suggests that an upward trend in the series has formed albeit off a very low base.

Once the volatile apartment category is factored in, building consents rose 12.5% to 1,357 in August, with 179 apartment units approved in the month, including 102 assisted living apartments at retirement village complexes.

"These increasing trends follow some of the lowest levels of new dwellings authorised since these series began," said government statistician Geoff Bascand in a statement today.

"Also the variable numbers for apartments and earthquake-related dwellings in recent months have resulted in a less than stable trend than normal."

Compared to the same month a year ago, the number of new dwellings excluding apartments rose 11% to 1,330 in August, while 179 new apartments were approved, up 25%.

The bulk of that was accounted for by the South Island, with 141 units approved in the month, representing a gain of 38% on the same month a year ago, while 138 units were approved on the North Island, up 16%.

The value of non-residential building consents was $277 million for the year ending August 31, down 6.2% on the previous year, with social, cultural and religious buildings accounting for the biggest decline, down $18 million in the year.

Economist reaction

ASB Economist Christina Leung said the recovery in consents was encouraging given how weak construction spending has been since 2009.

"The improvement in housing market activity in recent months points to a recovery in underlying demand for housing construction. Added to this will be the substantial amount of rebuilding activity we expect to take place over 2012," Leung said, adding that the data had no implications for the Reserve Bank and the Official Cash Rate.

"While recent domestic data has been encouraging, escalating global financial market volatility is dominating the RBNZ’s outlook at the moment," she said.

JP Morgan Economist Helen Kevans said the figures confirmed an upswing of a rebound since a low in February.

Although the overall level of permits remains depressed, she said.

"Throughout much of 1H11, persistent aftershocks in Canterbury imposed constraints on the rebuilding process, such that permits are still 19% lower in the first eight months of this year compared to the January-August period of 2010," she said.

"This is even though August 2011 was the first month for a year to see an increase in the actual number of homes approved compared with a year earlier. The August numbers do, though, reaffirm our view that rebuilding activity will be a major catalyst to GDP growth in late-2011 and going into 2012, when we think growth will return to an above-trend pace."

(BusinessDesk)