Building approvals climb for second month

Building consents rose 1.7% in August, adding to a 4.5% increase in July, according to Statistics New Zealand. Permits for apartments fell to just 30, down from 55 in July.

"Building activity remains at very weak levels although is likely to be close to a turning point, given the tentative pick-up in consent issuance," said Jane Turner, economist at ASB. "Low interest rates, an increase in net migration and the recent pick up in house prices are factors which should underpin residential construction activity going forward."

Turner predicts a "soft" recovery, as unemployment rises, income growth slows and longer-term interest rates increase.

There are some signs of stabilisation in the property market. The median house price rose to $346,750 in August from $340,000 a month earlier, according to the Real Estate Institute. The length of time it took to sell a house fell to 34 days from 37 days.