Building consents on the up

Residential building consents rose strongly in October, confirming expectations the fall in September was from people awaiting the outcome of the election.

Westpac economist Michael Gordon said total consents were up 8.8% in October, but the total was weighed down by a fall in apartment unit consents - a category running at unusually high levels in the last few months.

Excluding apartment units, residential consents were up 12.6%, fully reversing the 11% drop in September.

''It's now clear the housing market slowed ahead of the September 20 election on concerns a change of government would likely mean a less favourable tax treatment for property investment.

"Since the election, we've seen a strong rebound in mortgage approvals, property listings, house sales and now building consents.''

However, the underlying trend in building consents had not been as impressive as expected, he said.

Growth had slowed since the start of the year and October consents, excluding apartments, were still 4% below the peak reached in June.

It could be the post-election recovery had not yet fully played out. In the meantime, the slowing growth in consents was seen as a threat to forecasts of a substantial lift in nationwide building activity next year, Mr Gordon said.

What was most notable was the lack of momentum in Auckland.

''Given the obvious incentives to build in the region - relatively fast house price growth, relatively strong population growth, a greater legacy of under-building in previous years, and efforts to reduce tape - the recent weakness in building consents is of some concern.''

 

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