Building consents for new houses slip in June, but quarterly figures hit a five year high, according to Statistics New Zealand

The number of new houses approved slipped in June, but the recent strong figures saw building consents hit a five-year high in the June quarter, according to Statistics New Zealand.

Including apartment approvals - which are notoriously volatile - there was a seasonally-adjusted 4% drop in approvals in June. Excluding apartments, the fall was 4.5% - which is somewhat higher than economists were expecting, though there was anticipation that the market would take a breather from recent high consent approval numbers.

In the June 2013 month, 1487 new dwellings were consented, including 160 apartments. Of these apartments, 39 were retirement village units.

There were 1,327 new non-apartment dwellings consented in June 2013.

The 4% seasonally adjusted fall in number of new dwellings including apartments followed a 1% increase in May and a whopping 21% increase in April.

The 4.5% seasonally-adjusted fall in number of non-apartment dwellings followed a fall of 0.9% in May and a rise of 13% in April. 

Informetrics economists questioned whether the weakness in the latest month's figures suggested risk to the rate of recovery of the house buildilng market.

"On the face of it, we would not want to read too much into one month’s result – especially given the strength of consents in April and May," they said.

"However, the June decline coincided with increasing intervention into the mortgage market by the Reserve Bank, with loan-to-value limits being mooted and the Bank explicitly telling retail banks to be more careful with their lending.

"With the government and opposition both openly discussing intervening in the housing market, uncertainty about the value of future property has risen – making building investment less attractive. Access to credit remains an issue for developers, and increased uncertainty and policy to limit credit availability risk further holding back growth in building activity.

"Even so, these factors are just a risk at this point. We still expect overall consent numbers to pick up in coming months, with the rebuild in Christchurch and high property prices in Auckland stimulating activity in these regions," the economists said.

Statistics NZ said that together, the Auckland and Canterbury regions consented 822 new dwellings, including apartments, in the June 2013 month, which made up 55% of the national total.

Auckland had 453 approvals, including 121 apartments, which compared with a total of 264, including apartments, for the same month a year ago.

Canterbury had 369 approvals, compared with 296 for the same month a year ago.

Looking at the nationwide quarterly figures, a total of 5213 new houses, including apartments, were consented between April and June – the most since the June 2008 quarter.

“The seasonally adjusted number of new houses, including apartments, was up 16% in the June quarter. The trend for the number of new houses consented has been rising for the last two years and is now similar to the level five years ago,” industry and labour statistics manager Blair Cardno said.

The total value of all building work consented in the June quarter was NZ$2.9 billion. Residential building consents came to NZ$1.9 billion, while planned non-residential work came to NZ$1 billion.

The quarterly trend for the total value of building consents is at its second-highest ever level. The series peaked in the June 2007 quarter.

“The quarterly trend for the value of non-residential building work has been increasing for a year and is now at its highest level since September 2009,” Cardno said.

“It’s important to bear in mind these trends don’t take inflation into account,”  he said.

Canterbury earthquake-related building consents were valued at NZ$47 million in June, and included 53 new houses (for the June quarter, consents totaled NZ$155 million, including 166 new houses).