While the raw number of new housing consents in June fell from May, they rose in seasonally adjusted terms and were the highest for the month of June since 1976.
They were also 28% higher than the number in June last year.
There were 2,386 new housing consents worth $436 million issued in June, down from $2,482 worth $472 million in May, Statistics New Zealand says.
Seasonally adjusted, consents rose 9.6% from May after a 3.7% rise that month.
While apartment consents have been volatile for months, they fell from 324 in May to 271 in June, underlying the overall strength of the housing market. In the year ended June, apartment consents were up 88% to 5,969 compared with a year earlier.
Total housing approvals for the year ended June were up 29% to 29,068 worth $4.76 billion, also the largest June year total since 1976.
All regions except Gisborne saw higher consents in June than in June last year while Auckland was again the main contributor with 36% of June’s consents.
Darrin Gibbs, senior economist at Deutsche Bank, says today’s figures and recent sales of existing homes suggest his bank may have been too quick to call a peak in the market in April. "Strong migrant flows, falling interest rates and a shortage of spare supply are continuing to stimulate both activity and prices," he says.
The Reserve Bank has cut its Official Cash Rate (OCR) three times this year from 5.75% to 5%.
Gibbs says that housing consents tend to lag the number of house sales by about five months, suggesting further growth in approvals in coming months. Nevertheless, indications from the latest business sentiment survey suggest residential growth should ease later this year, he says.
Kate Skinner, economist at ASB Bank, says today’s data is a reminder that a further OCR cut "is by no means a certainty."
Reserve Bank governor Alan Bollard specifically mentioned concern about already strong housing inflation and investors’ possibly unrealistic expectations when delivering the latest OCR cut last week, she notes.
While there’s no sign of a slowdown yet, stricter immigration criteria and rising wholesale fixed rates may act as brakes. Nevertheless, "anecdotal evidence suggests there is still a lot more construction, both residential and non-residential, in the pipeline and, as such, we expect building consents to remain strong for some time yet," Skinner says.
