NZ building approvals climb 11% in April, suggesting life seeping back into market

Friday 29th May 2009

New Zealand home building approvals rose 11% last month, suggesting lower borrowing costs are beginning to breathe life back into the property market after demand tumbled last year.

Permits rose after a revised 1.7% decline in March, according to seasonally adjusted figures from Statistics New Zealand. Consents rose 4.5%, excluding apartments. Approvals in April dropped 58% from the same month of 2008.

The approvals data comes after Real Estate Institute figures for April showed a pick-up in the median house price and a reduction in the average time to sell a house, stoking optimism residential property may have reached the bottom of its cycle. The central bank slashed the official cash rate to a record low 2.5% last month. Floating rates at the major banks averaged 6.45% at the start of this month, down from 8.2% in December. Five-year fixed rates have fallen to 7.5% from 7.85%, according to the GoodReturns website.

“We have brought forward our forecast of the timing in the recovery in residential construction activity, which now seems likely to revert to positive growth in Q3,” said Darren Gibbs, chief economist at Deutsche Bank. The recovery “may now be underway.”

Reserve Bank Governor Alan Bollard last month said he expected interest rates to remain low until the second half of 2010.

The value of non-residential building approvals climbed 11% to $530 million, the highest since records began in 1965, helped by the expansion of Christchurch International Airport, the government statistician said.

Businesswire.co.nz

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