NZ building consents fall 7.2% in December, reflecting drop in apartments

New Zealand's residential building consents fell in December, mainly due to a drop in apartment consents.

Seasonally adjusted dwelling consents declined 7.2% to 2215 in December after falling 9.6% in November, Statistics NZ said. Seasonally adjusted permits for new houses, however, rose 3.5% to 1696 following a 7.7% slide in November.

Consents fell sharply on the month in Auckland to 740 versus 1156 in November. Record net migration is putting pressure on the nation's housing market where a shortage of supply is pushing up prices in Auckland, the country's largest city, making accommodation unaffordable for many.

"The slowdown in Auckland housing consent growth is concerning given existing supply shortages," ASB economist Jane Turner said. "Strong population growth over the past few years has lifted housing demand in many parts of the country, and we expect momentum to continue at least for another year."

New Zealand's central bank has long signalled that an overheated housing market is a key risk to financial stability and that much of the solution lies in supply. Earlier today the central bank kept interest rates steady at 1.75% and said a recent moderation in house price inflation is welcome and in part reflects loan-to-value ratio restrictions and higher mortgage rates. However, it said: "It is uncertain whether this moderation will be sustained given the continued imbalance between supply and demand."

In calendar 2016, 29,970 new dwellings were consented – up 10% from 2015, Statistics New Zealand said. Of those, 9930 were consents in Auckland, which is up 7.3% from 2015 but still below the 13,000 estimated to be needed to keep up with an expanding population. In Canterbury, where the Christchurch earthquake residential rebuild is slowly winding down, 5903 new homes were consented, down 9% from December 2015, Statistics NZ said.

The value of building consents was $1.58 billion in December, up 0.4% from November. Residential building consents fell 2.1% in value to $989 million while non-residential permits rose 2.8% to $595 million.

(BusinessDesk)