New Zealand residential building consents fell for the third month in four in March, underlining the tepid pace of recovery in a housing market that is facing tighter tax rules and less activity from developers.
Consents fell 0.4% in March, seasonally adjusted, after advancing 5.8% in the previous month, according to Statistics New Zealand. The number of apartments authorised rose to 75 last month from just 13 in February, which was the lowest since 1995. The monthly apartment figures are typically lumpy.
The building data comes a day after Reserve Bank Governor Alan Bollard noted that households "remain cautious, with the housing market and household credit growth subdued."
Finance Minister Bill English's Budget next month will include tweaks to the tax treatment of investment property, which could end depreciation on property and ring-fence tax losses on LAQCs. Developers have seen sources of funding dry up as finance companies faltered and banks tightened credit rules.
Registered Master Builders Federation chief executive Warwick Quinn says the building figures released today cofirmed their previous predictions that the recovery experienced in February was unlikely to be sustainable, due to the government's announcements on changes affecting investment property.
"We noticed an immediate drop off in public enquiry once these announcements were made, so while we are disappointed, we're not surprised," Quinn said.
"This shows just how fragile the recovery is for construction and with investment properties forming a significant part of the housing market, just how sensitive this sector can be."
The value of residential building consents was $5.4 billion in the 12 months ended March 31, the lowest for a March year since 2002, the government statistician said.
Excluding apartments, new dwellings authorised fell 8.3% in March, after rising 9.8% in the previous month. The value of non-residential building approvals rose 3.9% to $345 million.