Home-building approvals rise in November

Wednesday 14th January 2009

New Zealand home-building approvals rose in November, reviving from a record low in the previous month, as central bank interest rate cuts helped drive down mortgage costs.

Building approvals gained 4.3% in November, seasonally adjusted, after slumping about 20% in October, according to Statistics New Zealand. Excluding apartments, approvals fell 4%. The trend series showed total consents fell 3.3%, after a 4.1% slide in October.

Home lenders have been reducing mortgage rates on the prospect of further cuts in the official cash rate, with ANZ National reducing rate between 10 and 89 basis points for loans of two years or more. It follows reductions by ASB and Westpac last month. Economists predict Governor Alan Bollard will cut the OCR by 75 basis points to 4.25% on Jan. 29. Bank of New Zealand expects Bollard will keep cutting g the rate to 3.5% this year.

"The November consents data hasn't altered the situation with respect to housing activity - the bounce back was minimal for total consents, leaving activity at low levels, with the trends still heading down," said Robin Clements, chief economist at UBS New Zealand. "The only bright spot was non-residential building consents, where the trend value is rising and accelerating," he said.

The trend for non-residential consents rose 2.4% in November, the ninth monthly gain in a row.

Fletcher Building, the nation's biggest construction company, fell 1.8% to $5.88. In November, the company said profit would fall in the year ending June 30 amid "considerably tougher" markets for its products and weaker earnings from building products, distribution and infrastructure projects.

The unadjusted number of building approvals fell to 1,168 in November, the lowest since January 1992, Statistics New Zealand said.

By Jonathan Underhill

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