New Zealand’s dwelling consents rise sequentially in March

New Zealand’s number of dwelling consents rose sequentially in the month of March. Dwelling consents rose 14.7 percent after an upwardly revised 6.4 percent rise in February. This rise was driven by multi-dwelling consents, which rose 44.2 percent in March, after a 16.3 percent rise recorded in the prior month. Around three quarters of this rise was seen in Auckland.

Consent issuance can be volatile from month to month, in particular the multi-dwelling component. In spite of the monthly volatility, the outturn today was solid. In terms of trend, dwelling consent issuance is rising at 2 percent per month, a strong rate, especially in the context of already-high levels. Consents for houses rose 0.1 percent sequentially, but this follows 2.2 percent growth in February and 4 percent growth in January. Annual issuance is running at 31,600 consents. Consent issuance is at a high level and testing the limits of capacity constraints, noted ANZ in a research report.

From a floor-area perspective, issuance rose 2.9 percent sequentially. This augurs well for a growth in residential investment in the second quarter of 2018. Non-residential consents also rose solidly, rising AUD 708 million in March. This, along with solid residential activity indicates towards a widespread strength in construction activity in the second quarter of 2018.

However, in spite of high levels of activity, it is not all smooth sailing. The construction industry is grappling with capacity, capital and cost constraints. Construction companies are downbeat and are experiencing squeezed profits, according to the ANZ Business Outlook survey.

“In this environment, we believe consent issuance will struggle to push much higher”, stated ANZ.

At 12:00 GMT the FxWirePro's Hourly Strength Index of New Zealand Dollar was slightly bearish at -68.2008, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 131.496. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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