New Zealand’s building consents to trend higher

Building permits in New Zealand are likely to remain on a higher trend, according to ANZ. Building permits have been volatile, with consent issuance increasing sharply by 11% m/m in February, following a drop of 8% in January. However, the issuance trend is at a decent pace of 0.9% m/m, which is lower from almost 2% pace witnessed in mid-2015. However, the positive trend is likely to continue supported by strong growth in population, current drop in interest rate, the policymakers’ intentions to increase housing supply and the hints given by increasing housing prices, added ANZ.

But the clear differences region wise will be seen. A close watch will be kept on the capacity’s negative effect and construction cost inflation in Auckland. Extreme imbalance in housing demand/supply is seen in Auckland. This is expected to be a main factor is boosting the current increase in permit issuance, noted ANZ.

Meanwhile, it is uncertain if the housing credit growth will continue to be strong. As the Auckland market is taking off again, along with other regions, the moderation looks unlikely, according to ANZ. Housing credit growth seems as if it will be ahead of income growth.