Residential building cools

Residential building activity looks set to cool off again after signs of a resurgence late last year.

Excluding apartments, 1813 dwelling permits were issued during January, down 8 per cent on December on a seasonally adjusted basis, Statistics New Zealand said yesterday. Including apartments, there were 2161, down 10.8 per cent. ANZ economists said the fall in consents was "payback" for the strong December upturn.

UBS chief economist Robin Clements said housing was no longer adding to growth in domestic demand either directly through building or indirectly through the link between higher house prices and spending, adding "we don't see housing being the same concern for the inflation outlook that it was".

Therefore UBS continued to believe the Reserve Bank may begin cutting interest rates as early as June.