Home-building consents near 22-year low

Friday 29th August 2008

New Zealand home-building consents held near the lowest level in 22 years in July, suggesting the residential property market will continue to weigh on the economy this year.

Consents rose 4.7% in July to 1,405, seasonally adjusted, from 1,341 in June, according to Statistics New Zealand. The June reading was the lowest since 1986.

"Residential building activity is likely to drag on real GDP growth for the rest of this year and possibly into early next year," Robin Clements, senior economist at UBS New Zealand, said.

The domestic economy contracted in the first half of the year, according to the Treasury, the first recession since 1998 and UBS predicts a further shrinkage in the third quarter before growth resumes in the fourth. The trend in consents represents "a downside risk to our growth forecasts," Clements said.

The trend for the number of new dwellings, including apartments, has been declining since June last year.

By Jonathan Underhill

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