WELLINGTON: New Zealand’s home-building approvals rose for a fourth month in October, signaling that lower interest rates are kick-starting demand for property.
Permits increased 11.7% from September, Statistics New Zealand said in Wellington today, citing seasonally adjusted figures. Excluding apartments, approvals rose 11.2% to a 16-month high.
Reserve Bank Governor Alan Bollard last month said he is unlikely to raise borrowing costs from a record low until the second half of 2010 to help the economy emerge from its worst recession in three decades. The average variable home-loan interest rate fell to 6.02 percent in September from 7.2% in January, according to central bank figures.
“Things are looking a lot better than they did six months ago,” said Stephen Walters, chief economist at JPMorgan Chase & Co. in Sydney. “That’s pretty important for what the Reserve Bank of New Zealand is going to do with interest rates next year.
Bollard on Nov 11 said a return to riskier home lending of the past must be resisted to ensure there is no return to a debt-fueled housing cycle.
New Zealand’s dollar bought 71.42 US cents at 10:51am in Wellington from 71.40 cents immediately before the report.
Economists monitor approvals excluding apartments because apartment consents are volatile. There were 103 apartment approvals in October, down from 155 in September and up from 50 in October last year.
Excluding apartments, approvals in the three months through October rose 22% from the three months ended July 31, today’s report showed.
Economists expect building approvals will keep pacing gains in house sales, property prices and immigration.
Home sales rose 36% in October from a year earlier, the Real Estate Institute reported this month. House prices increased 1.3% from September. The number of permanent migrant arrivals exceeded departures by 18,560 in the year ended Oct 31, the most since 2004, the government said last week.
Property construction has slumped from a year earlier amid a recession, which began in the first quarter of last year, and as a credit crisis curbed development projects. In the 12 months ended Oct 31, approvals fell 31% from a year earlier.
The value of approvals for home building and renovations rose 9.5% in October from a year earlier to NZ$481 million (RM1.22 billion), the agency said.
The value of non-residential building approvals dropped 5.6% to NZ$329 million, led by offices and farm buildings. -- Bloomberg
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