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NZ home building consents tumble in June as economy shrinks

Tuesday 29th July 2008

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New Zealand home building consents tumbled 20% in June, adding to evidence the housing market is continuing to weigh on an economy which probably contracted in the first half of the year.

The number of consents for new dwellings, including apartments, fell a seasonally adjusted 20% to 1,337 in June, Statistics New Zealand said. Excluding apartments, consents dropped 13%.

High interest rates and surging costs for fuel and food sapped demand in the housing market last month. The central bank has cut the official cash rate a quarter point to 8% since then, prompting lenders including ASB Bank to lower their mortgage rates.

"Housing is still in decline," said Robin Clements, senior economist at UBS New Zealand. "Consents probably have got further downside. For the rest of this year, residential building is going to be a drag on the economy."

Shares of Fletcher Building, New Zealand's biggest construction firm, fell 4% to NZ$6.22 and has slumped about 44% this year.

Consents in Auckland fell 15% to 5,752 while those in Canterbury, the second-largest region by number, fell 15% to 3,822.

The value of residential building consents fell 34% to NZ$455 in June in May from a year earlier, while non-residential consents dropped 18% to NZ$313 million.

By Jonathan Underhill



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