KEY POINTS:
House building surged in January but not enough to redress the general decline in new construction during the past few months.
Statistics NZ said yesterday that the number of consents for new houses and apartments rose in January by 3.9 per cent but was still down 5.2 per cent for the year to January 2007.
Jarrod Kerr, economist at J.P. Morgan Securities in Australia, described the latest data as "a dead cat bounce", saying New Zealand's volatile building approvals figures continued to highlight underlying weakness in the sector.
Building consents had been falling since August, he said. "The downward trend in building approvals over the past six months supports our view that New Zealand's housing market continues to cool, albeit slowly.
"These numbers alone are, however, not enough to keep the Reserve Bank from tightening policy next week, but should provide it with some comfort on the outlook for the overheated housing market."
Darren Gibbs, Deutsche Bank's chief economist, predicted the market could recover by winter.
Shamubeel Eaqub, Goldman Sachs JBWere's research chief, said the house building sector would revive in the first quarter of this year.
Robin Clements at UBS NZ predicts the Reserve Bank will hold the official cash rate next week, which he acknowledged was "a non-consensus view". He said the latest building data supported that argument.
