Housing consents bounce back in Oct

Building apprentice Miro Mitchell at work on a new house in Omanu. Photo / NZME..

New Zealand house building consents rose at their fastest monthly pace in more than two years in October, after three months of dwindling issuance in the lead-up to September's general election.

The number of new permits issued, excluding the volatile apartments series, rose 13 per cent to 1,792 in October, the fastest pace since March 2012, according to Statistics New Zealand. Including consents for apartments and retirement village units, permits rose 8.8 per cent to 1,990, the fastest pace since November 2013.

On an unadjusted basis, total residential dwelling building consents rose 14 per cent to 2,152 in October from the same month a year earlier, while permits excluding apartments were up 12 per cent to 1,973.

Issuance of new building consents tapered off in the months leading up to the Sept. 20 general election and was cited as a reason for everything from lower business confidence to a drop off in share market activity, reduced house sales and investors dumping shares in power companies. The re-election of the National-led administration has been expected to see a resumption in activity after uncertainty caused by the opposition parties' proposal to introduce a capital gains tax.

Today's figures show Auckland's new issuance in October rose to 591 permits, including 67 apartments, from 476 permits in the same month a year earlier, while Canterbury reported 686 new permits from 572 in October 2013. Wellington issued 108 new permits from 169 a year earlier.

New dwelling issuance was up 22 per cent to 24,363 in the year ended Oct. 30, of which housing permits were up 12 per cent to 21,054. The value of all dwelling issuance was up 24 per cent to $7.63 billion in the year.

The value of non-residential building permits rose 3.1 per cent to $456 million in October from the same month a year earlier, and was up 15 per cent on an annual basis to $4.91 billion.

Westpac senior economist Michael Gordon said it was now clear that the housing market had slowed ahead of the September General Election, on concerns that a change of government would likely have meant a less favourable tax treatment for property investment.

Since the election, there had been a strong rebound in mortgage approvals, property listings, house sales, and now building consents.

'That said, the underlying trend in building consents has not been as impressive as we were expecting. Growth has slowed since the start of the year, and October consents (excluding apartments) were still 4 per cent below the peak reached in June," said Gordon.

" It may be that the post-election recovery has not yet fully played out, but in the meantime we have to regard the slowing growth in consents as a threat to our forecasts of a substantial lift in nationwide building activity next year."

"What's most notable is the lack of momentum in Auckland - in fact, excluding apartment units, consents actually fell further in seasonally adjusted terms. Given the obvious incentives to build in the region - relatively fast house price growth, relatively strong population growth, a greater legacy of under-building in previous years, and efforts to reduce red tape - the recent weakness in building consents is of some concern."

Read the Stats NZ building consents release here:

with NZ Herald