Nov. 28 (Bloomberg) -- New Zealand home-building approvals fell to a record low in October, adding to pressure on the central bank to cut interest rates and temper a declining property market that threatens to prolong a recession.

Approvals plunged 21.9 percent from September when they rose a revised 11.1 percent, Statistics New Zealand said in Wellington today, citing seasonally adjusted figures. The 1,121 approvals in October were the lowest since the series began in January 1982.

New Zealand’s economy is shrinking as a global recession and tightening credit curbs spending and forces consumers out of the property market. Reserve Bank Governor Alan Bollard, who has cut the benchmark interest rate by 1.75 percentage points since July, may lower borrowing costs by 1.5 percentage points next week to kick-start demand, according to seven of 15 economists surveyed by Bloomberg News. Eight expect a 1 point reduction.

“The central bank has a lot of work ahead of it,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “They’re in a recession and they’ve still got a 6.5 percent cash rate.

“We can’t reasonably expect a turnaround in the housing sector until we see mortgage rates come down sharply.”

The New Zealand dollar fell to 55.15 U.S. cents at 11:09 a.m. in Auckland from 55.33 cents just before the report was released.

Excluding apartments, approvals fell for a sixth month, declining 7.1 percent from September, the agency said. There were just 50 apartment approvals issued in October, the lowest since April 2000, the agency said.

The value of home-building approvals dropped 38 percent from a year earlier, the agency said, citing unadjusted figures. The value of non-residential approvals declined 14 percent.

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

Last Updated: November 27, 2008 17:11 EST