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New houses down as rate rises bite
Real estate news By Anne Gibson
Thursday January 31, 2008 5:00AM
New house building consents have fallen to their lowest level in six years as the heat goes out of the residential construction sector. Council authorisations were given to build 25,544 new houses last year, the lowest number since 2002 and nearly 6000 houses down on the peak of 2004. Work slowed considerably last month as high interest rates took their toll, a pattern which emerged earlier in 2007.
Statistics New Zealand's data, out yesterday, showed 1738 new housing units were authorised in December, down 145 units on December 2006. The value of new housing work also fell from $564 million in December 2006 to $539 million last month. Daniel Wills, ASB economist, said interest rates were partly responsible. "This data reinforces recent real estate data suggesting moderation in the housing market over the second half of 2007 as Reserve Bank tightening between March and July begins to bite and net immigration has softened," he said.
The Reserve Bank raised the official cash rate four times last year to a record 8.25 per cent. Robin Clements, senior economist at UBS, agreed with Wills. "The dwelling consents data is further proof - if it was needed - that this key factor in the inflation process in rapidly cooling. Activity - consents and sales - are well down and the house price data from Quotable Value and the Real Estate Institute shows that material progress is being made on this front also," he said. Statistics NZ said there was little change in the value of non-residential building consents, which totalled $331 million in December, but the South Island was feeling the pinch hardest.
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