New Zealand’s dwelling consents fall sharply in December, residential investment to see weaker trend in H1 2017

The number of dwelling consents in New Zealand dropped in December on sequential terms. Softness in building consent issuance continued in December. This is the second straight month where issuance has dropped sharply in New Zealand, mainly driven by weaker apartment consent.

The number of residential consents issued in December dropped sharply by 7.2 percent sequentially on a seasonally adjusted basis, following a downwardly revised 9.6 percent decline in November. Apartment consents mainly drove the sharp decline in December, falling 31 percent sequentially in December and 13 percent in November. Meanwhile, consents for houses were up 3.5 percent in December.

Region wise, softness in consents was mainly seen in the Wellington region in November; however, in December, the weakness was centred on Auckland, which recorded a drop of 15 percent. However, the estimates showed that weakness was also seen in Canterbury and Waikato, noted ANZ in a research report. Canterbury’s figures continue a weakening trend that has been in place for the better part of 12 month.

The softness might partially reflect the changed funding environment for the developers. Given the bank funding pressures, construction cost escalation and the risks linked with some types of developments, there have been certain high-profile cancellations of apartment developments in the Auckland region.

The value of non-residential consents continues to be solid. They recovered to a total value of NZD 547 million in seasonally adjusted terms in December, and in trend terms is rising at a rate of 2.8 percent sequentially. Construction cost pressures continue to stay. Looking at monthly volatility, the value of consents per square metre continues to trend higher, growing 7.7 percent year-on-year in December.

At 5:00 GMT the FxWirePro's Hourly Strength Index of New Zealand Dollar was slightly bearish at -55.4698, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 58.8243. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex