New Zealand's commercial property sector stayed in the doldrums last month with permits for new construction down to a five-month low, while consents for new homes, excluding apartments, slid to their weakest level since January.
The value of non-residential consents shrank 40% to $289 million in May from a year ago, according to Statistics New Zealand data, and was down from $327 million in April.
That came in the same month that the government changed its tax treatment for property, removing claims on depreciation of buildings.
Consents for new homes, excluding apartment approvals, tumbled 9.5% to 1,333 new houses, from May 2009. Including apartments, new permits sank 9.6% to 1,360.
"The decline in consent issuance for shops and restaurants indicate some softness in private non-residential construction in the near-term. Furthermore, consent issuance of office buildings remains subdued," said Jane Turner, economist at ASB.
"Demand for new housing has started to peter out in recent months, with the RBNZ set to steadily increase interest rates over the next year."
The property market has been subdued this year, in part because of the clamp down on tax loopholes associated with property investment, while the economic recovery brought forward the timing for the Reserve Bank's tighter monetary policy, both of which have since occurred.
Inward migration has also been falling in recent months, after a surge during the depths of the global recession, further reducing pressure for new housing.
Investors snubbed the kiwi dollar on the back of the soft data, with the currency falling to 70.55 US from 70.76 cents.
Statistics New Zealand said the trend for both residential and non-residential building permits is increasing, albeit at a slower pace.
The total value of consents issued for all buildings was down 3.9% to $9.55 billion in the year ended May 31. Of that, residential permits increased 8% to $5.61 billion and non-residential permits declined 17% to $3.94 billion.
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