Data Flash (New Zealand) Building Consents - June 2000

Key points

The number of new dwelling consents issued fell 9.2% mom (s.a.) in June to a level 23% lower than a year earlier.

Commercial building consents with a value of $170m were issued in June. The value of consents issued during Q2 was unchanged from that issued in Q1 but down over 9% compared with a year earlier. ú

Commentary

The large fall in dwelling consents during June was expected following very sharp growth in May (which itself represented a bounce back from an extremely weak and holiday-affected April). In underlying terms, we think that the housing market has probably bottomed out. Residential investment accounts for around two-thirds of buildings construction with non-residential investment accounting for the remaining third. The sharp fall in dwelling consents over the last 6 months suggests that residential investment will have a significant negative impact on GDP in Q2 and Q3, a view captured in our recent economic forecasts. The weakness in commercial building consents, if maintained, would lead us to revise down our forecast of non- residential investment activity over the coming year.

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