Building activity hits record levels but Covid still causing delays

Building activity rose a seasonally adjusted 3.7 per cent in the first quarter on the previous three months, the biggest quarterly rise in two years. Photo / Sandy Millar, Unsplash

By RNZ

Building activity has hit record levels, but Covid-19 related delays are affecting a significant proportion of house building projects in Auckland, according to figures from Stats NZ.

The volume of building work put in place, which excludes price movements, rose a seasonally adjusted 3.7 per cent in the first quarter on the previous three months, the biggest quarterly rise in two years.

Stats NZ's construction statistics manager Michael Heslop said "the construction industry continued to be busy in the March 2021 quarter, driven by historically high volumes of residential work".

The amount of residential building work was up 4.3 per cent on the previous quarter, with non-residential work growing 2.6 per cent, notably school buildings and factories, after a drop in activity in the three months ended December.

The overall value of the work done in the quarter was $6.7 billion, much of which was in Auckland, although the strongest growth was in Wellington and Waikato.

The strength of the numbers added to the prospects of better economic growth for the first quarter.

Westpac senior economist Satish Ranchhod said "the better-than-expected March quarter construction result comes atop of other indications that economic activity has continued to firm in the early part of 2021 ... the risks are tilting towards a firmer outturn than the flat result we had been expecting".

Construction activity might soften in the near term because of difficulties in getting labour and materials, but the longer-term view was positive because of the housing boom and pipeline of infrastructure projects, he said.

Delays hit Auckland housing projects

Meanwhile, a separate Stats NZ survey showed delays and blockages in the supply chain following Covid-19 were biting deep into new housing projects in Auckland.

Feedback from more than 3000 builders, developers, and owners showed more than half of the projects were moderately or severely affected, particularly in getting supplies of materials and equipment, rather than money or labour problems.

Heslop said "the perceived impact of Covid-19 on building projects may also be influenced by the high volume of building consents for new homes".

- RNZ