New Zealand home-building approvals rose for the first time in three months, driven by apartment consents as declining short-term mortgage rates help lure investors back into the property market.
Building approvals rose about 12%, seasonally adjusted, in February, climbing from a record low in January, according to Statistics New Zealand. Excluding apartments, the number of consents rose 0.3% last month. Dwelling consent were 40% from the same month of 2008.
Lower borrowing costs are offsetting the impact of rising unemployment in an economy mired in recession. The central bank lowered the official cash rate to a record low 3% this month and said further, smaller cuts are possible. Variable rate mortgages fell to about 6.45% this month from as much as 10.45% in October, according to the GoodReturns.co.nz website. Five-year fixed rates bottomed last month at an average 6.5%, from 8.89% in October.
“In the near term we expect concerns about job security to weigh on buyers’ minds,” said Darren Gibbs, chief economist at Deutsche Bank. “But we expect the housing market to gain some traction towards the end of this year, setting the scene for a sustained recovery in building activity in 2010.”
Gibbs said that given the current low levels of activity, “once confidence returns the recovery is likely to be very steep.”
The value of non-residential building approvals rose about 6%.