House building climbs by 23 per cent

Photo / Glenn Jeffrey

House building is on the rise but commercial work has fallen back.

Statistics NZ's building consent data out yesterday showed a 23 per cent rise in housing consents since May.

But consents for non-residential buildings worth $257 million were issued in September, the lowest monthly value since January 2007.

This is a sharp reversal of trends throughout this year which saw house building drop dramatically but commercial work pick up.

Bruce Black, head of Holmes Consulting Group, one of New Zealand's largest structural and civil engineers, said the non-residential construction sector had enjoyed a big boost from the Government during the recession.

When commercial workloads might have been expected to turn down, big prison, roading, school and hospital jobs had helped the sector ride out the harder times, he said.

At the same time the private development sector collapsed, leaving many consultants with lighter workloads.

But Black holds fears about workloads in the next two years.

Tighter Government spending expected from budget constraints could severely hold back this part of the market, he said.

ASB economist Jane Turner said the house-building lift came after very subdued levels of activity this year.

"Residential construction is poised to lift off its current low levels. However, the lift in housing demand has been relatively muted and the recovery in residential construction is likely to be subdued.

"The decline in construction activity has created a significant amount of slack in the economy and has been responsible for much of the unwinding in inflation pressures over the past year," she said.

Deutsche Bank economist Darren Gibbs said Statistics NZ had confirmed the recovery in house construction activity.

This mirrored the national broader recovery in the housing market and the improving sentiment expressed by architects and others involved in the sector which had shown up in the various business surveys, he said.

Statistics NZ showed how the housing additions and alterations market was booming, worth more than $1 billion a year.

In 2004, consents were issued for work worth just $886 million in this sector.