New Zealand's residential property sector remained subdued last month with permits for new construction edging up from a slump in May, while commercial property extended its decline.
Consents for new homes, excluding apartment approvals, rose 1.7% to 1,316 in June from the same month a year ago after a 10% slump a month earlier, according to Statistics New Zealand data. Including apartments, the number of new homes authorised rose 3.5% to 1,373.
"Dwelling consents tends to lead construction activity by around three months, and recent trends in consent issuance points to a relatively subdued recovery in residential construction activity," said Jane Turner, ASB economist.
The recent sharp slowdown in net migration and resulting slower population growth will weigh on the outlook for new construction demand."
The property market fell into the doldrums this year after a surge in net migration stoked demand for new houses last year as tight credit conditions starved new development. The Reserve Bank painted a grimmer picture of the economy in its official cash rate review yesterday, noting a slowdown in migration as a brake on consumer spending.
Commercial property development extended its torrid year, with a 26% decline in the value of consents issued to $228 million last month from June 2009. That carries on the trend, which has a quarterly decline of 32% and an annual of 18%.
ASB's Turner said issuance remained weak "indicating continued softness in private non-residential construction in the near term," and recent business surveys indicate the construction will stay "soft over the coming quarters as businesses continue to show some caution over expansion plans".
The biggest fall came from education buildings, which dropped $39 million to $27 million. That's the smallest monthly spend since March 2009, and comes as the government has flagged public-private partnerships as a way to build new schools. The annualised value of consents issued for education buildings rose 11% to $654 million in the June year.
The value of consents issued for all buildings last month was $736 million, a 6.4% increase from a year earlier.