Data Flash (New Zealand)
Estimate of New Dwelling Units - December 1999
Key Points
Following a seasonally adjusted fall of 15% (mom) in November, the number of dwelling permits consolidated in December
with a 0.6% increase.
That result still leaves the level of residential construction activity around 5-10% above what industry sources would
consider sustainable - which suggests that further upward pressure on construction costs is to be expected. Construction
costs, as included in the CPI, increased by an annualised 2.4% in Q4/99.
Notwithstanding the continued high level of permits, the slowdown from the boom period in mid-1999 implies a softening
in construction activity, with an overall negative contribution to GDP growth expected for this year.
The downward correction in building activity is consistent with the current weakness in the market for existing homes.
However, while the level of residential construction activity has so far remained high, the secondary housing market has
recorded lows not seen for seven years.
The housing market weakness is at odds with buoyant retail spending and consumer confidence, but consistent with
continued net emigration.
Ulf Schoefisch, Chief Economist, New Zealand