Marlborough Property Investors' Association

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Residential building consents back on the rise

Dwelling unit approvals look to be trending back upwards in a move that could add to pressure on the Reserve Bank to lift interest rates at its review next Thursday.

Figures published today by Statistics New Zealand (SNZ) show building consents were issued for 1782 new housing units in April, compared to 1558 in April 2006 and 1617 in April 2005. April is typically the month when the lowest number of consents are issued.

SNZ said the trend for the number of new dwelling units appeared to be increasing, but it was too early to confirm any change in direction.

When it released the March figures, SNZ had said the trend was continuing a decline which started in September.

Late last month, the Reserve Bank lifted official interest rates a quarter of a percentage point to 7.75 per cent because of strengthening medium-term inflation pressures coming largely from a hot housing market.

That came after a similar 25 basis points lift early in March, which followed 15 months when rates were unchanged.

 At 7.75 per cent the Official Cash Rate is the highest in the developed world.

In a Reuters poll this week, only two of 16 analysts polled by Reuters saw a more-than 50 per cent chance of a rate rise next week, with the median risk put at 35 per cent.

But Westpac Bank said it had changed its forecast and now expected a quarter percentage point rate rise next week, followed by a similar sized rise most likely in September.

"It is clear there is a good deal more looming inflation pressure to tackle than was evident only five weeks ago," markets economist Sharon McCaw said.

In today's building consent data, SNZ said the value of consents issued for residential buildings last month was $575 million, $131 million (30 per cent) higher than in April 2006.

The trend for the value of residential buildings has been increasing since December.

For non-residential buildings, the value of consents issued last month was $297m, $88m (42 per cent) higher than in April 2006.

For all buildings the value of consents last month was $872m, $220m (34 per cent) higher than in April 2006.

For the year to April, consents were issued for 25,964 new dwelling units, up 617 (2.4 per cent) from the previous April year.

The value of consents for residential buildings rose $835m (12 per cent) for the year, while the value of consents for non-residential buildings was flat.

The value of consents for all buildings for the year to April was up $846m (7.9 per cent) to $11.6 billion.