January 12, 2018 / 12:34 AM / in a year

UPDATE 1-NZ building approvals rebound sharply in Nov, quell development worries

    * NZ November dwelling consents rise 10.4 pct
    * Reverses sharp drop in previous month
    * Points to much needed pick-up in development - economists

 (Recasts, adds economist comment, market reaction)
    WELLINGTON, Jan 12 (Reuters) - New Zealand residential
building approvals bounced in November after a sharp drop the
previous month, quelling concerns housing development had run
out of steam as the government tries to address a nationwide
    The number of dwellings approved jumped a seasonally
adjusted 10.8 percent in November, erasing a 10.4 percent drop
the previous month, data from Statistics New Zealand showed on
    While the series is volatile, the strong result went some
way towards assuaging fears that residential development was
faltering in the midst of a nationwide housing shortage.
    The dearth of housing stock has been blamed for the sharp
jump in property values in the past few years, and has become a
heated political issue.
    House prices soared more than 50 percent in a decade, and
almost doubled in Auckland, which have priced out many
first-home buyers. 
    Despite strong demand, the construction sector has struggled
to keep up as it became mired in a skill shortage and banks
tightened their grip on development lending.            
    Outcry over the housing shortfall in part fuelled the
success of the new Labour-led government, which took the helm in
October after campaigning to build tens of thousands of homes in
a program dubbed 'KiwiBuild'. 
    The New Zealand dollar          rose to a fresh three-month
high of $0.7272 after the data. It last stood at $0.7264.
    November's leap was largely driven by consents for
apartments in Auckland, which hit a 15-year high according to
the statistics agency. 
    "Importantly, if Auckland can sustain the pace...it would
finally start eating into its significant shortfall of housing -
albeit, very gradually," said Satish Ranchod, senior economist
at Westpac Bank.
    The latest figures showed building consents were 8.6 percent
higher than the same month a year ago.
    Excluding apartments, flats, and retirement village units,
the number of consents for new houses was down 1.3 percent.
    "Looking ahead over the next few months, additional
uncertainty, as developers await further details of the proposed
KiwiBuild plan, may weigh on construction demand," said Jane
Turner, senior economist at ASB Bank.
    "But this should be a short-lived dip." 

 (Reporting by Charlotte Greenfield; Editing by Shri Navaratnam)
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