New Zealand home building consents rose last month, with the biggest increase in Canterbury, reflecting rebuilding efforts in Christchurch after the devastating earthquakes.
Building consents rose 8.3 percent to 1,326, seasonally adjusted and including apartments, according to Statistics New Zealand. Excluding apartments, consents rose 3.7 percent in January, the first gain in three months.
Canterbury’s gains were driven primarily by permits for retirement units, suggesting a build up of demand because of the ongoing aftershocks in the region that have delayed the reconstruction efforts.
Consents in Canterbury jumped to 379 last month, the highest of any region, from 199 in December. In the city of Christchurch alone, there were 209 consents issued, up from 61 in the previous month.
By contrast, new dwellings authorized in the North Island fell 0.8 percent to 595, with those issued in Auckland falling 10 percent to 232.
There were 198 consents issued for apartments, in unadjusted numbers, last month, from 148 in December.
In the year, total home building consents fell 9.1 percent.
Total non-residential consents fell to 655 in January from 814 in December.
Here is the reaction from ASB economist Jane Turner:
Residential consents
Residential building consent issuance remained subdued in January. The 8.2% increase in consents was boosted by a large increase in apartment consents. Apartment consents are often lumpy and volatile month to month. The increase this month was due to 174 retirement units, which were concentrated in Canterbury. StatsNZ noted that some of the consents for these units had been delayed due to earthquakes.
Excluding apartments, residential consent issuance picked up a very subdued 3.7% over the month, following from the previous month’s flat result. Over the second half of 2011 it appears that building demand has lost some momentum. We still expect to see a gradual increase in underlying building demand over the coming year, particularly from Auckland given the increasingly tight housing market.
Canterbury consent issuance was skewed by the retirement units approved. If these were excluded, then consent issuance would have remained at low levels. It is still too early to see a pick up in earthquake-related residential building. We expect to see the early stages of this activity over the second half of 2012.
Non-residential consents
Non-residential consents dropped in January, although this is not unusual for the time of year. Non-residential consents in January are down slightly on year-ago levels. Over the past few months, non-residential consents have shown tentative signs of improvement. Nonetheless, commercial construction intentions remain reasonably subdued in business confidence surveys, and point to a very gradual recovery in commercial construction over 2012.
Implications
Consent issuance remains weak and continues to point to a very subdued construction outlook in the near term. Low levels of housing construction over the first half of 2012 will continue to put pressure on the housing supply and generate upward pressure on house prices, particularly in Auckland andCanterbury. As earthquake reconstruction activity picks up in earnest in 2013, we can expect some of these supply pressures to alleviate. Given there remains a large degree of uncertainty and risk of further delays around the rebuild process, will still see no urgency for the RBNZ to increase the OCR before December 2012.
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