Building activity drops, values up

File photo

Building work fell 6.3 per cent in New Zealand during in the March quarter, dragged down by the Christchurch earthquake and a fall in non-residential building, latest figures show.

At the same time the value of all work rose by 4.5 per cent to $11 billion in the year to March.

Statistics New Zealand said the fall was driven by a decrease in non-residential building work - down 10.4 per cent - with a smaller decrease recorded for residential building work, down 2.1 per cent.

"We don't normally comment on regional information for the value of building work because this survey is not designed to produce accurate regional estimates," Statistics New Zealand's business statistics manager Louise Holmes-Oliver said.

"However, the information we have suggests that in Canterbury, building activity decreased significantly, at least in part due to the 22 February earthquake.

However, even without the Canterbury figures, there would still be a fall in residential and non-residential building activity across the country, Statistics New Zealand said.

ASB economist Christina Leung said the continued low level of dwelling consent issuance in recent months indicated underlying building demand remained extremely weak.

"Against the backdrop of population growth, the low level of residential building activity heightens the risk the NZ housing market becomes undersupplied."

While construction activity currently remains at weak levels, Leung said she expected the outlook over 2012 to be more promising.

"In particular, rebuilding activity in Christchurch should provide a boost to the construction sector. Nonetheless, with ongoing uncertainty in Christchurch and weak consent issuance in other regions there remains little urgency for the Reserve Bank to lift the OCR."