January building consents drop to multi-year depths

The value of building consents in January plumbed multi-year depths, but the number of seasonally adjusted housing units authorised was up from low levels in December.

The value of consents for all buildings fell to $537 million in January -- the lowest level in nine years and 11 percent lower than a year earlier, Statistics New Zealand (SNZ) said today.

Residential building consent value in January was down 19 percent from a year earlier at $309m, the lowest level since January 2002, while the value of non-residential consents rose 2.3 percent from a year earlier to $228m.

The 867 dwelling units including apartments authorised in January was the second-lowest level on record and 17 percent lower than a year earlier.

Excluding apartments, 777 new dwelling units were approved, down 22 percent from January 2010. There were 90 apartments.

Seasonally adjusted, new dwellings including apartments rose 9.6 percent from December, while new dwellings excluding apartments rose 7.7 percent.

Those increases were a reflection of the size of the decline in December compared to normal seasonal variation, SNZ said.

Deutsche Bank chief economist Darren Gibbs said the rebound in seasonally adjusted new dwellings including apartments followed an 18.2 percent slump in December and left issuance 14.6 percent below year-earlier levels.

While he still expected construction to strengthen gradually during 2011, the boost from reconstruction in Canterbury that had been expected after the September earthquake, would start somewhat later because of last month's earthquake, Mr Gibbs said.

He continued to see some prospect that non-residential activity would stabilise in the early months of this year, but the possibility of any improvement in 2011 appeared to have been dashed by last month's earthquake in Christchurch, with significant commercial reconstruction in Canterbury unlikely to get under way until well into 2012.

ASB economist Chris Tennent-Brown said that outside of Canterbury, the national level of consent issuance was broadly consistent with ASB's weak residential construction forecasts for late 2010 and early 2011.

"However, we expect that residential building consent issuance will pick up gradually over the year," he said.

"Furthermore, if consent issuance remains at the current low level for too long, there is a significant risk of a housing shortage in areas where the population is growing and more homes will be required in the years ahead."

ANZ said consents could not stay at the current low levels given ongoing population growth and earthquake rebuilding

"Housing shortages were already starting to emerge in Auckland, and are now extreme in Christchurch. Canterbury rebuilding will provide a boost to activity, but we learned from the September quake that this will be delayed," ANZ said.

A stabilisation or pick-up in house sales recently suggested there may be a recovery in consents in coming months.