November building consents 2nd highest in year, but down on November 2010 and still historically weak

Housing approval numbers reached their second highest monthly level over the past year in November 2011, Statistics New Zealand says, although they were down almost 6% on November 2010.

Statistics NZ also said November building consents in Canterbury identified as being earthquake-related were worth NZ$47 million, up from NZ$26 million in October and NZ$29 million in September. Since the first earthquake struck the Canterbury region on September 4, 2010, 914 earthquake-related consents have been issued, Statistics NZ says, worth NZ$230 million. This includes 217 new dwellings, of which 145 were relocatable units.

Nationwide for November there were 1,384 housing approvals granted , including apartments, which is down 5.9% from November 2010 and only bettered over the past 12 months by the 1,509 approvals last August.

A total of 1,275 new houses, excluding apartments, were approved in November, which is a 2.5% rise. This was also the second best over the past year, behind August's 1,330. A total of 109 new apartments - all  retirement units - were approved, which was down from 226.

The largest regional increase was in Auckland, with November consents up 68, or 19%, to 430.

'Encouraging' rise in consents for office buildings

However, Statistics NZ's industry and labour statistics manager Louise Holmes-Oliver said approval numbers remain close to recent historically low levels.

ASB economist Jane Turner said overall residential consent issuance points to ongoing weakness in construction activity over the start of 2012. However, Turner said "encouragingly" in the non-residential area there was a rebound in consent issuance for office buildings. The value of consents for office and administration buildings in November was NZ$74 million, up 83% year-on-year.

"There was also an increase in the consent issuance of retail outlets and restaurants, suggesting businesses are starting to plan for expansion of operations in anticipation of a recovery in domestic demand over the coming year," Turner said. "Nonetheless, commercial construction intentions results have been mixed in recent business confidence surveys, suggesting a degree of caution remains amongst businesses."

ASB's economists expect underlying demand for housing construction to pick up over 2012, reflecting the current tightness in the housing market especially in Auckland. From mid-2012 they expect earthquake reconstruction to get underway and lift construction activity from current lows, back towards levels seen between 2003 and 2008.

"However, there remain many uncertainties around the reconstruction process and risks are skewed towards a later start. Overall, November building consent issuance points to continued weakness in the near-term construction outlook and highlights there is little need for the Reserve Bank to lift the Official Cash Rate (from 2.5%) before December 2012," Turner said.

A total of NZ$919 million worth of total building work, down NZ$74 million, or 7.4%,  from November 2010, was consented in November 2011, comprising NZ$504 million of residential work (down NZ$9 million) and NZ$415 million of non-residential work, (down NZ$65 million). The NZ$504 million of residential work was the highest monthly figure in 12 months, since November 2010.

Most of Canterbury approvals by value was non-residential

Meanwhile, of the NZ$47 million of earthquake related approvals in Canterbury, NZ$35 million was for non-residential work, NZ$7 million for residential work including 10 new dwellings, and NZ$5 million was for non-building construction.

Of the 914 earthquake-related consents issued in Canterbury since September 4, 2010, 217 were for new dwellings, including 145 relocatable units.

Earthquake-related consents cover residential, non-residential, and some non-building construction. Non-building construction may include swimming pools, bridges, reservoirs, and retaining walls, Statistics NZ says. Consents that are mainly for demolitions are excluded.

A series of earthquakes have rattled Christchurch over the summer holiday period since quakes measuring 5.8 and 6.0 on the Richter scale hit the region on December 23.