'Encouraging' jump in building consents

The number of consents for new buildings had an encouraging surge in April, but is still running at historically low levels.

Statistics New Zealand today said consents were issued for 1400 new dwelling units last month, of which 91 were apartments.

Including apartments, the seasonally adjusted number of new dwellings authorised last month was up 8.5 percent from March. In March it had lifted just 0.1 percent.

The 15.5 percent rise in the apartments-excluded figure in April followed a fall of 8.6 percent in March.

The 1400 new units were 38.8 percent higher than a year earlier, and the 1309 units excluding apartments up 61.6 percent.

Residential building approved last month was worth $480 million, 35 percent higher than a year earlier.

The value of non-residential building consents was $327m, 38 percent down on the figure for April 2009, which had the highest value on record and was boosted by development at Christchurch Airport.

Goldman Sachs JBWere economist Philip Borkin said the April figures were a "pleasant and encouraging" surprise after having been disappointing recently.

Despite that, the latest growth rates masked what was still a very low level of consents issued, particularly on a per capita basis, Mr Borkin said.

A 13.2 percent seasonally adjusted rise in the floor area of dwelling consents was consistent with an ongoing recovery in residential building, and was useful as a forward indicator for the level of real construction activity.

That activity would also be supported by repair to leaky buildings, which would not necessarily be represented in consent data, he said.

In fact, in the past year consent numbers had been less of a relevant indicator of future construction activity than had been the case in the past.

Mr Borkin expected a key factor influencing consent numbers in coming months would be tax changes announced in last week's budget.

It would probably not be until at least the June figures, and more likely the July figures, that it would be possible to get a good feel for the impact of the tax changes.

"It is quite possible that more certainty leads to a small release in pent-up demand in housing activity," Mr Borkin said.

"However, with house price growth expected to be subdued and interest rate increases on the way, there are also some headwinds."

- NZPA