In April, the number of permits for residential dwelling in New Zealand jumped a seasonally adjusted 6.6% m/m, partially recovering from the previous month’s decline of 9.7% m/m. Lately, the pattern of building approvals have been quite volatile. The data for April sees the “see-saw” pattern continuing that has been witnessed in the recent months, said ANZ in a research report. Approval for “houses” grew sharply by 15% m/m, countering the decline of 18% in multi-dwelling consents.
However, looking through the fluctuations, the total issuance can be depicted as flat, noted ANZ. Seasonally adjusted issuance of 2,390 is consistent with the six month average. Actually, it continues to be lower than the monthly high recorded in July 2015. According to Statistics NZ, the underlying trend is currently at -0.5% m/m pace. Nonetheless, the trend issuance for houses has a run-rate of 1.8% currently.
An upward trend in issuance is likely being restricted by increased signs capacity constraints. The labor market data for the first quarter indicated rising non-Canterbury construction sector wage inflation. The residential consents’ value per square metre on a three month average basis was up 8% y/y.
On a positive side, the non-residential consents’ value was up additional 9% m/m. The issuance, compared to a year ago, is more robust for storage, education and retail buildings. Given the pipeline, the upbeat trend in non-residential issuance is likely to continue. According to ANZ, the construction sector is likely to continue supporting the New Zealand’s domestic economy for a while. But the rising capacity constraints and costs are a meaningful risk, added ANZ.
