March 30 (Bloomberg) -- New Zealand home-building approvals rose for the first time in three months in February, a sign that falling interest rates may kick-start the property market.

Approvals gained 11.6 percent from January when they declined 13 percent to a record low, Statistics New Zealand said in Wellington today, citing seasonally adjusted figures. Excluding apartments, approvals rose 0.3 percent, the first increase in 10 months.

Reserve Bank Governor Alan Bollard this month cut the benchmark interest rate to a record-low 3 percent and said borrowing costs are “very stimulatory.” The government will cut income taxes on April 1 and immigration rose to a 15-month high in February, which may bolster the property market.

“I don’t think this is a sign of a turnaround,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. Some lenders are still increasing fixed interest rates in New Zealand, and “if you’re looking for a recovery in the building approvals numbers in the kiwi economy this isn’t a good signal.”

The trend for home-building approvals remains in decline, the statistics agency said today. Apartment approvals were the highest in five months.

The value of approvals for building and renovation in February was 42 percent less than a year earlier, it said, citing unadjusted figures.

The value of non-residential building approvals rose 5.9 percent and exceeded residential approvals for just the second time in 10 years.

Construction shrank 14 percent in the fourth quarter as gross domestic product fell 0.9 percent, the biggest decline in more than 16 years. New Zealand’s economy contracted for the fourth straight quarter and may not resume growing until the second half of 2009, making the recession the worst in more than three decades, Bollard said March 12.

Home-building approvals fell to a record in January amid concerns that companies will fire more workers, damping incomes and making consumers reluctant to take out loans.

Consumer confidence dropped in the first quarter, according to an index from Westpac Banking Corp. and McDermott Miller Ltd. published last week. The jobless rate will rise to an 11-year high of around 7 percent this year, according to the government.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

Last Updated: March 29, 2009 17:59 EDT