Housing boom booming

Housing consents continued to rise in May with 2,282 new dwellings worth $387.4 million approved.

Statistics New Zealand says that value is the highest ever recorded in a month.

The May figures compare with the 2,206 dwellings worth $380 million approved in April.

The trend in the number of new dwelling units has been increasing since November 2000 at an average rate of 1.7% a month, the government statistician says.

Nevertheless, in seasonally-adjusted terms consents fell 5.9% in May after a 9.7% increase in April. That decline was entirely due to a sharp fall in apartment consents from 439 worth $30.5 million to 267 worth $32.2 million. Excluding apartments, consents were up 6.1% in May.

Compared with May last year, consents were up 24.4% and were 11.5% higher than the average level since 1990.

Deutsche Bank senior economist Darren Gibbs says because of the usual lagged relationship between existing house sales and new construction, consents are likely to keep rising in the next few months until peaking in the September quarter.

"We think that activity in the existing housing market is close to peaking, assisted by actual and prospective rises in interest rates, an expected easing in the net migrant inflow and natural cyclical factors," Gibbs says.

He is picking that the Reserve Bank will raise its Official Cash Rate again next week from 5.5% to 5.75%, although the risk is increasing that it will leave rates unchanged, largely because of recent global economic developments.

Activity in the housing alterations and additions arena was also brisk with such work totalling $72 million, the highest monthly value recorded.