New Zealand’s residential building accelerated in the third quarter, suggesting construction may help economic growth exceed the central bank’s forecast.

Residential building excluding inflation gained 5.1 percent from the second quarter when it rose 3.9 percent, Statistics New Zealand said in a report released in Wellington today. Total construction, including commercial work, increased 2.1 percent after contracting in the second quarter.

Reserve Bank Governor Alan Bollard yesterday forecast the $102 billion economy grew 0.6 percent in the third quarter. A slowdown in property sales and approvals to build new houses hasn’t yet slowed construction, which is set to decline next year, said Doug Steel, economist at Westpac Banking Corp. in Wellington.

“It was a fraction on the high side and seems to go against the trend in consents,” said Steel, who expects the economy grew 0.7 percent in the quarter. “Over the next six to nine months, we expect a contraction in construction.”

Westpac is forecasting a 10 percent slump in home construction in the year ending March 31, 2009. Bollard yesterday forecast a 5.9 percent decline as high borrowing costs curb demand for new homes.

Bollard raised interest rates four times between March and July to a record 8.25 percent. Yesterday he said rates are likely to stay high for longer because of inflation pressures. Just two of 16 economists surveyed by Bloomberg News expect a rate cut before June 30 next year.

Home-building approvals fell for the third time in four months in October, according to government figures. House sales in October slumped 23 percent from a year earlier, the Real Estate Institute said.

Commercial construction dropped 2 percent in the third quarter following a 7.6 percent decline in the three months to June 30.

source:chinapost.com.tw

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