KEY POINTS:
Commercial building work is forecast to continue running at high levels next year, driven by strong demand for new hospitals and hotels, but decline by 2008.
An Institute of Economic Research report for property consultants Rider Hunt predicted that record levels of non-residential building consents would continue in the short term.
Consents were issued for $5.2 billion worth of non-residential work in the year to June, up on the $4.6 billion issued in the same period last year. Consents rose for building new hospitals and nursing homes, hotels and motels.
Those sectors would continue to be active over at least the next six to nine months, the report said, but by 2008 non-residential consents would decline, only picking up again in 2010 and 2011.
"The recent slowdown in residential building has freed construction resources to meet deferred demand in the non-residential building sector. Consents data signal much work still to come in the short run at least.
"But investment in buildings would be dampened by revenue uncertainty as economic growth slows and cost rises put pressures on profitability."
BNZ chief economist Tony Alexander said new monthly housing consents data out this week showed an upturn in construction.
The seasonally adjusted number of dwelling consents was up by over 6 per cent in September and 17 per cent in the September quarter, he said, which probably reflected the positive impact of the tight labour market and upturn in net migration inflows since October.
Auckland mortgage brokers Cairns Lockie noted a rush to build apartments in the latest data.
"Residential housing consents hit an 18-month high in September with 2545 consents being granted, a large number for apartments," the brokers said.
"The increase in consents is on the back of a slight increase in immigrants coming into this country, and people deciding to build now believing that building and compliance costs will continue to increase ahead of our inflation rates over the next couple of years."
