Total building approvals surged in March to their highest level for any one month since September 2008, but Statistics NZ said seasonally adjusted measures show a slight fall back to levels seen in January. (Updated to include ASB economist Chris Tennent Brown's view that the figures show the housing market is soft) Approvals for 1,501 dwelling units were issued in March, which is up from 1,375 in February and up from 1,091 in March a year ago. However, seasonally adjusted consents excluding apartments fell 8.3% in March from February. They rose 9.8% in February from January. "Although there have been large seasonally adjusted movements in the last two months, the trend has been levelling off after increasing since March 2009," Statistics NZ business statistics manager Louise Holmes-Oliver said. ASB economist Chris Tennent Brown said the the weaker core result was disappointing given ASB had been expecting the trend in consent issuance to continue recovering.
Over the past six months core consents have averaged 1300 a month though migration and house sales imply core consents should have been closer to the 1600-1800 per month mark. Dwelling consent issuance does continue to improve when compared to year-ago levels, but the pace of recovery is slow. Positive migration flows, and the spring pick-up in the housing market failed to spark a significant pick-up in building consent issuance. Instead, the slowdown observed in the property market over recent months may be holding back building intentions. Uncertainty over the taxation of property should be clarified in the May budget. But right now it is contributing to a soft 2010 housing market, and in turn, weak building intentions. We expect overall building activity will pick up over 2010, having been in retreat for much of the preceding 2 years as housing construction shrank. We expect housing construction will recover to a degree over 2010 and provide a boost to GDP growth. However, the modest level of consent issuance had raised a question mark over the strength of the recovery.
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