Early Easter has impact on building activity in March; But Canterbury figures particularly strong

Building consents for new houses including apartments fell sharply in March, down a seasonally adjusted 9.1%, according to Statistics New Zealand.

This followed a seasonally adjusted 4.4% gain in February.

Excluding the highly variable apartment consents, the seasonally adjusted total for new houses in March was down 3.1%.

There were only 16 new apartments approved during March,  the the lowest monthly number of apartments since February 2010, although numbers continue to vary a lot from month to month, said Statistics New Zealand's industry and labour statistics manager Blair Cardno.

“If we look at the long-term picture, the trend for new house numbers has been positive for two years,” said Mr Cardno, “but the rate of growth has slowed in recent months.”

Westpac senior economist Michael Gordon said the sharp fall in March consents was the result of two factors: a fall in the volatile apartments component to rock-bottom levels, and one less working day than usual for March due to the timing of the Easter holidays.

"Both of these factors point to a sharp rebound in the April figures, so today's figures don't challenge our forecast of a further upward trend in consents over the next couple of years," he said.

The apartments component of the figures can't suffer a further sharp decline, Gordon said, "and indeed has plenty of room to bounce, so we suspect it will be a strong positive factor for the April total".

"The second factor was that Good Friday fell in March this year, meaning one less working day than usual. This happens fairly infrequently, and we find that seasonal adjustment programs tend to struggle with moving holidays. (Our attempt to capture the Easter effect suggests an adjusted 1.5% increase in ex-apartment consents for the month.) The flipside of this is one more working day than usual in April this year, which will boost the number of consents by a similar magnitude."

The latest figures from Statistics NZ showed there was a substantial fall in the number of new dwellings consented for the Auckland area. The number fell by 118 compared with March 2012 to 393. However, there were no apartments consented in March this year, compared with 104 at the same time a year ago, thus making up most of the difference.

But Auckland has been leading the country's house prices higher, due largely to a perceived shortage of housing following a big drop in construction over the past few years.

ASB economist Christina Leung said the overall building consent figures for March were "fairly weak", even after taking into account the volatile nature of this monthly series.

"While rebuilding in Canterbury is continuing to underpin construction demand, the trend improvement in house-building demand in the rest of NZ appears to be slowing. This will put additional pressure on the housing market, particularly in Auckland. We do caution that the early occurrence of Easter this year could have impacted the results."

Monthly changes in the seasonally adjusted number can be volatile, partly as apartment numbers rise and fall.

However, new housing consents continued to rise in Canterbury, reaching 444 in March 2013.

“Across the Canterbury region, the number of new houses consented reached a six-year high,” Cardno said.

“Both Waimakariri and Selwyn districts each broke records with their highest monthly totals since the series began in April 1990.”

Housing consent numbers for March 2013, compared with March 2012, were: 1475 new houses, including apartments (down 5.4%) 1459 new houses, excluding apartments (up 4.7%) 16 apartments (down 149 from 165).

Earthquake-related building consents in Canterbury were estimated at NZ$51 million, including 57 new houses.

Non-residential building consents were valued at NZ$365 million in March 2013, 20% higher than in March 2012. This was boosted by work on prisons in the Auckland region. Data for building consents is obtained from all territorial authorities in New Zealand.