Housing consents rise but trend may have slowed

January residential building consents were up on both December and January last year, but Statistics New Zealand says that the trend, which has been increasing since January last year, appears to have slowed in the last few months.

Tuesday, February 26th 2002, 6:44PM

by Jenny Ruth

The unadjusted figures show 1,526 new homes worth $252.9 million were approved in January compared with 1,497 worth $306.2 million in December and 1,335 worth $208.2 million in January last year.

Seasonally adjusting the figures, January consents actually fell 0.9% from December, at odds with market expectations of a strong rebound and with the buoyancy of sales of existing homes.

Real Estate Institute figures released last week showed the number of homes sold in January was a robust 6,771, even though the month is traditionally slow because of the holiday season. It was the highest number of homes sold in a January month since 1997.

The surprising weakness in the consent figures does introduce some doubt about how soon and how fast interest rates will need to start rising again, but economists still believe the rebound is merely postponed.

Macquarie Bank head of economics Richard Gibbs says taken at face value, today’s figures erode some of the confidence about how resilient the New Zealand economy is.

Nevertheless, he still thinks the combination of low mortgage rates and a "dramatic" turn around in long-term migration trends will sustain the current upswing in housing activity well into this year.

The latest figures show New Zealand gained a net 11,200 residents in the December quarter compared with a net loss of 200 in the December 2000 quarter.

Gibbs says any moderation in the rate of housing consents "should assist in ameleriorating any risk of excess supply in the housing sector as well as serving to curb those elements of the interest rate markets which are prone towards an excessively hawkish attitude."

Deutsche Bank senior economist Darren Gibbs says the January consents were 0.5% lower than the average level since 1990 and followed a seasonally adjusted 7.5% decline in December.

As well, house pricing indicators "have remained reasonably subdued."

Today’s figures showed consents were higher in 12 of the 16 regions the government statistician measures compared with January last year. The four regions to show a decrease between the two periods are Northland, Gisborne, Manawatu-Wanganui and Wellington.

The number of apartment consents dropped sharply to 107 worth $11.5 million in January from 151 worth $25.8 million in December. There were 70 apartments worth $8.4 million approved in January 2001.

In the year ended January, there were 20,730 new homes worth $3.195 billion approved, up from 19,893 worth $2.913 billion approved in the previous year. The number of apartments approved in the latest year was 2850 worth $241.6 million, up from 2,254 worth $211.9 million approved a year earlier.

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