Sports stadia boost building consents

Construction work at Eden Park. Photo/ Kenny Rodger

The construction industry across the country may be coming out of its steady decline - but it's not house-building that is driving all the activity.

For almost every month this year, the value of non-residential building consents has exceeded the value of residential building consents, Statistics New Zealand said today.

Before this year, the last month non-residential building consent value exceeded residential building consent value was over 10 years ago.

The value of non-residential consents for May 2009 is $479 million, the second highest monthly value recorded, and is boosted by consents for sports stadiums around the country.

UBS NZ economist Robin Clements said while the building consent data was "mixed" there was an "improving underlying tone".

"These improving trends are consistent with the rebound in house sales already seen and suggest that housing activity has reached a trough," he said.
This was in line with his view that housing would "cease to be a drag on growth" in the second half of this year, contributing to a stabilisation in the economy.

ASB bank economist Nick Tuffley said today's building consent data did show "early signs" that the housing market was starting to pick up, something that rising migration would also bolster.

"Typically there tends to be a 3-6 month lag from sales turnover picking up to dwelling consents lifting, so it could be a few more months until consents lift in earnest from what amounts to very subdued levels," he said. "Evidence down the track that house prices have bottomed out will also give more confidence to those at the coalface of development."

Non-residential construction had held up better than residential, though he anticipated further weakness this year.

"Nevertheless, the boost over May from planned stadium work highlights that there is still some support to the sector from various infrastructure projects around the country."

Today's building consent numbers would do little to change the economic outlook of the Reserve Bank.

The bank is anticipating a very strong recovery in residential construction over the March 2011 and 2012 years.

"Consents have yet to turn up to indicate that will occur, but the turn-up in house sales and migration will continue to give the Reserve Bank confidence the construction uptick will eventuate."

The highest monthly value of non-residential consents was recorded in April 2009.

For May 2009, the trend for the number of new housing units authorised, excluding apartment units, continues at a low level, although the decline in the trend is showing signs of easing. Including apartments, the trend for new housing units has increased for the last four months.

Apartment numbers can vary considerably from month to month.

The seasonally adjusted number of new housing units authorised, excluding apartments, fell 3.1 per cent in May 2009.

Including apartments, the seasonally adjusted number of new housing units authorised rose 3.5 per cent in the same period.

-NZ HERALD STAFF