The number of new building consents issued in August has risen, possibly pointing to a "soft" recovery in the building market.
August recorded the most new housing consents since September last year; 1165 new housing units were authorised, although the number remained at a low level, Statistics New Zealand said today.
However, consents were issued for just 30 apartment units, the lowest number for any month since December 1995. Apartment consent numbers can be volatile.
Overall, the seasonally adjusted number of new housing units authorised, excluding apartments, rose 2.8 per cent, following an 11.4 per cent rise in July.
Including apartments, the seasonally adjusted number of new housing units authorised rose 1.7 per cent, following a 4.5 per cent rise in July 2009.
August's residential consents were worth $440 million, while non-residential building consents were worth $384m.
ASB economist Jane Turner said the figures showed building activity remained at very weak levels although likely to be close to a turning point, given the tentative pick up in consents.
"Low interest rates, an increase in net migration and the recent pick up in house prices are factors which should underpin residential construction activity going forward.
"However, the recovery is likely to be comparatively soft with demand remaining under pressure from rising unemployment, slowing income growth and the recent pick up in longer-term interest rates."
The gap between house sales - a proxy for housing demand - and consent issuance remained, with building slow to catch up as economic uncertainty continued to weigh on construction demand, she said.
The largest contributor to the value of non-residential building consents was social, cultural, and religious buildings, which included several indoor sports facilities.
For the August 2009 year, the value of consents issued for residential buildings fell 27 per cent, while the value for non-residential buildings rose 8 per cent, compared with the August 2008 year.
Non-residential consents had another strong month in August, lifting 3.4 per cent to be up 5.9 per cent on year-ago levels.
Non-residential consents have continued to rise over the past 12 months despite recession.
The strength was attributed to consents related to the several indoor sports facilities and education-related buildings, Ms Turner said.
The increase has offset the weakness in offices and factories.
Goldman Sachs JBWere's New Zealand strategist Bernard Doyle said the trend in non-residential construction was now coming off its highs. However, the cycle would be relatively mild, lagging the rest of the domestic economy's recovery.
"We continue to see residential construction as an important prop for growth over the calendar year 2010."
Low interest rates, higher house sales, migration and a sharp turn in construction sentiment all pointed to further upside, he said.
- NZPA
