SOURCE NZ Herald
5.00AM Tuesday January 15, 2008

The demand for apartments may be cooling.

New Zealand’s home-building approvals fell for a third month in November adding to signs that record-high interest rates are dampening demand for property, particularly apartments.

Approvals to build new houses and apartments declined 0.1 per cent from October, when they dropped 4.6 per cent, Statistics New Zealand said yesterday, citing seasonally adjusted figures.

Excluding apartments, however, approvals climbed 1.8 per cent, the most since May when they gained 2.5 per cent.

A cooling real estate market will further slow an economy that expanded at the weakest pace in a year over the third quarter.

Easing domestic demand will help curb inflation pressures that prompted Reserve Bank Governor Alan Bollard to raise borrowing costs four times last year, taking his benchmark to 8.25 per cent.

“The housing market is under the gun and facing considerablepressure,” said Philip Borkin, an economist at ANZ National Bank. in Wellington.

“The interest rate increases we’ve had are really taking their toll now,” he said.

Nine of 15 economists surveyed by Bloomberg News last month forecast the central bank would lower rates this year as economic growth moderated. Five expected no adjustment and one predicted higher rates by December.

- Bloomberg