New Zealand's home-building approvals rose to a two-year high in April, suggesting the property market is heading for a gradual recovery, buffeted by higher interest rates.
Consents rose 8.5% last month, after a revised 0.1% increase in March, according to Statistics New Zealand. Excluding approvals for apartments, which tend to be lumpy and volatile, consents surged 16%.
The Reserve Bank is expected to raise the Official Cash Rate (OCR) next month, signalling a resumption of tightening in the wake of the recession, which will drive up home loan rates. Against that, building activity may pick up ahead of the October 1 increase on goods and services tax to 15% from 12.5%, as construction firms seek to be the impost. Property investors are also armed with the details of tax changes in the Budget, which was milder than some had feared.
"Residential construction is set to gradually recover over the year," said Jane Turner, economist at ASB. Still, the recovery will be "fairly subdued" as interest rates rise and the pace of net migration slows, she said.
The value of consents for home building and renovation jumped 35% to $480 million last month from April 2009, the government statistician said.
Non-residential building approvals declined 38% to $327 million, partly reflecting the expansion of Christchurch airport's terminal a year earlier.
Consents were granted for 91 apartments, of which more than half were in retirement villages.