(WELLINGTON) New Zealand's home-building approvals rose for a fourth month in October, signalling that lower interest rates are kick-starting demand for property.
Permits increased 11.7 per cent from September, Statistics New Zealand said in Wellington yesterday, citing seasonally adjusted figures. Excluding apartments, approvals rose 11.2 per cent to a 16-month high.
Reserve Bank governor Alan Bollard last month said he is unlikely to raise borrowing costs from a record low until the second half of 2010 to help the economy emerge from its worst recession in three decades. The average variable home-loan interest rate fell to 6.02 per cent in September from 7.2 per cent in January, according to central bank figures.
'Things are looking a lot better than they did six months ago,' said Stephen Walters, chief economist at JPMorgan Chase & Co in Sydney. 'That's pretty important for what the Reserve Bank of New Zealand is going to do with interest rates next year.'
Mr Bollard on Nov 11 said a return to riskier home lending of the past must be resisted to ensure there is no return to a debt-fuelled housing cycle.
Economists monitor approvals excluding apartments because apartment consents are volatile. There were 103 apartment approvals in October, down from 155 in September and up from 50 in October last year.
Excluding apartments, approvals in the three months through October rose 22 per cent from the three months ended July 31, yesterday's report showed.
Economists expect building approvals will keep pacing gains in house sales, property prices and immigration.
Home sales rose 36 per cent in October from a year earlier, the Real Estate Institute reported this month. House prices increased 1.3 per cent from September. The number of permanent migrant arrivals exceeded departures by 18,560 in the year ended Oct 31, the most since 2004, the government said last week.
Property construction has slumped from a year earlier amid a recession, which began in the first quarter of last year, and as a credit crisis curbed development projects. In the 12 months ended Oct 31, approvals fell 31 per cent from a year earlier. -- Bloomberg
Source: Business Times, 1 Dec 2009
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