A consistent pattern of weakening housing construction activity is emerging, although housing consents are still at historically high levels.

The 2,544 housing consents worth $490.8 million issued in May were just one less than the number issued in April but in seasonally adjusted terms were down 0.5%. While not a huge drop, it was the fourth month in a row to show a decline.

Statistics New Zealand says its trend series has been declining since November last year.

National Bank economists note that excluding apartments, consents have been broadly unchanged since February in seasonally adjusted terms.

In May, apartment consents fell to 306 worth $41.5 million from 644 worth $55.5 million in April.

Still, the bank notes there is a lag between consents being issued and the houses actually being built which suggests there is more supply coming on than demand.

"We anticipate that residential investment growth will contract over 2005. However, the risks to the housing market weigh on the downside – net migration is falling, construction costs are rising and building consents, although falling, remain high," National Bank says.

Ulf schoefisch, chief economist at Deutsche Bank says significant backlogs suggest that the downtrend in actual construction won’t occur until the end of this year.

But he says construction cost inflation may have peaked with the annual increase in the average construction cost per square metre unchanged at 7.2%, down from a peak of 9.8 earlier this year.

Today’s figures showed the 31,793 consents issued in the year ended May were 11% higher than in the previous year and that it was the largest total for a year ending May since 1975.

Nine out of 16 regions recorded more consents in May this year than in May 2003 while the Auckland region contributed 835 units, or 33%, of the total number of May’s consents.