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Home Building Slumps In August, Set To Continue Declining

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Fuseworks Media
Fuseworks Media
Statistics NZ.jpg
Statistics NZ.jpg

Wellington, Sept 30 NZPA - A nearly eight-year low in housing units authorised in August may herald more weakness in the home building sector yet to come, economists said.

The 1328 new housing units authorised in August the lowest monthly total since December 2000, Statistics New Zealand (SNZ) said today.

Slowing net migration and high interest rates combined with falling house prices had reduced incentives to build, ASB Bank economist Jane Turner said.

"The weaker result implies we can expect even more decline in residential construction, which has already contracted 15 percent since Q3 2007," she said.

Residential building consents issued in August were valued at $457 million, down $308 million from August 2007, and the lowest monthly total since April 2006.

The seasonally adjusted number of authorised new dwellings, including apartments, fell 7.9 percent in August compared to July, while excluding apartments, the number fell 8.9 percent.

Deutsche Bank chief economist Darren Gibbs said large declines had already been foreshadowed by the slump in house sales since the Reserve Bank started raising interest rates in March 2007.

"We continue to expect the commercial construction sector to hold up much better than the residential sector over the next 18 months or so, due mainly to spending in the Government sector.

"That said, we have been looking for signs of some softening due to the impact of broader weakness in the economy and the impact of the credit crunch on funding costs and availability," Mr Gibbs said.

SNZ said the trend for the number of new housing units had been falling since mid-2007, dropping 42 percent since then.

The trend for the total value of residential building consents was down 33 percent in the same period.

Non-residential building consents were valued at $362m, down $36m million from a year earlier.

For the year ended August, the value of consents issued for residential buildings was $6.83 billion, 13 percent lower than in the year ended August 2007.

The value of non-residential construction authorised for the year rose 6 percent to $4.38b.

The value of consents issued for all buildings in August was $819m, down 30 percent from a year earlier, while for the year the total value was down 6.6 percent to $11.2b.

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