KEY POINTS:
The number of new houses being built is falling rapidly, in line with a worsening economy.
Figures from Statistics New Zealand show residential building consents issued by councils were at their lowest level for some years.
The peak of the cycle this decade was four years ago when councils gave consent for builders to put up 25,874 new houses.
Latest figures showed that had dropped to just 18,604 new house consents in the year to September.
Goldman Sachs JBWere (NZ) research director Shamubeel Eaqub said the figures showed an extremely weak sector.
"The construction sector outlook remains very challenging. A deepening local recession and global financial crisis will likely see the Reserve Bank deliver further interest rate cuts over the months ahead," he predicted.
Statistics NZ said the trend for the number of new dwellings including apartments had fallen 41 per cent since mid-2007.
Last month, 1635 new houses including 366 apartments were authorised.
The number of new houses getting consent fell in 13 of the 16 regions surveyed, according to the annual figures.
Auckland consents were down 22 per cent or 1399 houses and apartments in the year to September, compared to the year to September 2007. Canterbury suffered a 26 per cent drop, down 1204 houses and apartments, and Waikato was down 30 per cent or 1143 houses and apartments.
Only Wellington, Southland and Gisborne had more new dwelling consents issued in the latest period compared to a year before.
ASB economist Jane Turner said the future for building looked barren and could worsen in the next three months.
"The fundamentals for housing construction remain weak, with falling house prices reducing incentives to build, weak net migration inflows and cooling domestic demand. The recent drop in mortgage rates may help at the margin. However the benefits of this are likely to be offset by the increased uncertainty coming from the recent intensification of the global credit crunch.
"September is likely to be too early to see the effects of the most recent deterioration in the financial and economic outlook, so it is likely we might see ongoing weakness in consent issuance over the next few months."
