Bloomberg News

N.Z. Building Approvals Surged to 13-Month High in August

September 29, 2011

(Updates with currency in fifth paragraph.)

Sept. 30 (Bloomberg) -- New Zealand home-building approvals surged to a 13-month high in August, signaling stronger economic growth.

Permits jumped 12.5 percent to 1,357 in August from July when they rose a revised 14.3 percent, Statistics New Zealand said in Wellington today. Excluding apartment permits, which are volatile, approvals surged 16.9 percent to also reach the highest since July 2010.

Building approvals accelerated after dropping to a two-year low in February, when the nation’s deadliest earthquake in eight decades struck the South Island city of Christchurch. Central bank Governor Alan Bollard on Sept. 15 said the domestic economy was growing faster than he had expected, while signaling he may delay interest-rate increases because global financial turmoil is exacerbating the risks of a slowdown in the economies of trading partners.

“Dwelling consent issuance has begun to lift off depressed levels,” Philip Borkin, an economist at Goldman Sachs & Partners New Zealand Ltd. in Auckland, said in a research note before the report. “We expect further improvement following recent gains in housing-market turnover.”

New Zealand’s dollar was little changed after the report, buying 77.02 U.S. cents at 10.50 a.m. in Wellington. It fell as low as 76.52 cents yesterday in New York after Fitch Ratings cut New Zealand’s sovereign credit rating one step to AA.

Annual Advance

Approvals rose from the year-earlier period for the first time since August 2010, the statistics agency said.

Bollard cut the cash rate by half a percentage point to a record-low 2.5 percent in March to revive confidence after the February temblor. Twelve of 17 economists estimate he will leave the cash rate unchanged until next year, according to a Bloomberg News survey.

A magnitude-7 earthquake in Christchurch and surrounding districts in September last year wrecked homes and roads, before a temblor measuring 6.3 struck close to the city on Feb. 22, killing 181 people, stalling spending and setting back business investment.

Since September, there have been 190 new-home approvals that were earthquake related, including 145 relocatable units intended to house displaced residents, the statistics agency said. Total related consents are about 500, including commercial buildings and non-building construction such as retaining walls or swimming pools, the agency said.

In August, there were 57 approvals for new homes identified as related to the quakes, of which 50 were relocatable units, the agency said. There were also NZ$12 million ($9 million) of non-residential consents in the month, it said

--Editors: Garfield Reynolds, Benjamin Purvis

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


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