New home consents slow for summer

By BRIAN FALLOW

A rising trend in the number of residential building consents approved last year flattened off over the summer.

The 1525 consents for new dwellings issued last month, seasonally adjusted, was almost unchanged from December and down 8 per cent from the peak in November.

But compared with January last year, the number of consents was 14 per cent more and the value 21 per cent higher at $252 million.

Last month's house sales, reported by the Real Estate Institute, were 40 per cent up on a year earlier.

Bank of New Zealand economist Craig Ebert said that to some extent reflected the low base of a year ago. "However the level of house sales in seasonally adjusted terms is now in excess of the last peak in late 1999 and more akin to the boom times of the mid-1990s."

It reflects a household sector enjoying the fruits of a strong labour market and interest rates which have fallen 1.75 percentage points in the past 12 months.

Immigration would have also boosted demand in Auckland.

The increased activity has not fuelled much in the way of house-price inflation. Quotable Value reported an increase in average prices of 1.2 per cent in the December quarter, making 2.5 per cent for last year. In Auckland the annual rise was 2.9 per cent.

Mr Ebert said price rises might be in the pipeline because of evidence of rental shortages in Auckland and to a lesser extent Christchurch.

"However the lack of broader house price pressures amid red hot turnover may also reflect a rapid supply response a la late 1999."