New Zealand July Home-Building Approvals Rise 5%

By Tracy Withers

Aug. 28 (Bloomberg) -- New Zealand’s home-building approvals rose for the third time in four months in July as lower mortgage rates help kick-start demand for property.

Permits increased 5 percent from June, Statistics New Zealand said in Wellington today, citing seasonally adjusted figures. Excluding apartments, approvals rose a second month, gaining 11.2 percent.

Reserve Bank Governor Alan Bollard cut the benchmark interest rate to a record-low 2.5 percent in April and last month said he is unlikely to raise borrowing costs until late 2010 to help the economy recover from its worst recession in three decades. Economists expect building approvals to keep pacing gains in house sales, property prices and immigration, and eventually lead the economy out of the recession.

“Positive news emerging about the housing market with prices beginning to rise, talk of a pending supply shortage and increasing net immigration are providing better incentives to build,” said Philip Borkin, an economist at ANZ National Bank Ltd. in Wellington. “With commercial construction looking weaker, the net effect is the building industry will remain subdued for a time yet.”

New Zealand’s dollar bought 68.70 U.S. cents at 11:30 a.m. in Wellington, unchanged from immediately before the report.

Home Sales

Home sales rose 34 percent in July from a year earlier, the Real Estate Institute reported earlier this month. House prices rose 1 percent from June, the institute said. The number of permanent migrant arrivals exceeded departures by 14,488 in the year ended July 31, the most since 2006, the government said last week.

Excluding apartments, approvals exceeded 1,000 for the first time since December, the agency said. There were just 55 apartment approvals issued in July.

Approvals in the three months ended July 31 rose 12 percent from the three months through April.

Property construction has slumped from a year earlier amid the recession, which began in the first quarter last year, and as a credit crisis curbed development projects. In the seven months ended July 31 approvals fell 37 percent from the year- earlier period.

The value of approvals for home building and renovations fell 15 percent in July from a year earlier, the agency said. The value of non-residential building approvals declined 3.2 percent.

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