Residential building work picks up

Non-residential building work has kept falling, said Stats NZ today, but residential work was up. Photo / Northern Advocate

Residential building work has picked up for the second quarter, but is still well below the peak of the market in September 2007, latest figures show.

The volume of residential building activity increased 2 per cent during the March quarter, in line with an increase in the number of building consents issued during the period, Statistics New Zealand (SNZ) said.

But the volume of work was not as high as anticipated by some economists because of a subdued property market and difficulty for some builders obtaining development finance following the finance sector collapse.

Total construction rose 0.7 per cent during the quarter, while the volume of non-residential building work fell 0.8 per cent to reach its lowest level in six years.

ASB economist Jane Turner said both residential and non-residential activity was weaker than thought, although residential construction is expected to gain throughout the rest of the year.

Goldman Sachs JB Were economist Philip Borkin said repair work associated with the leaky buildings crisis should provide a welcome boost for the sector, while some building work could be brought forward in anticipation of the GST increase in October.

SNZ figures show the unadjusted value of residential buildings put in place in the March quarter was $1.4 billion, 2.3 per cent lower than a year earlier, while the non-residential total fell 15 per cent to $1.1b, and the total value fell 8.2 per cent to $2.5b.

The seasonally adjusted value of residential building work, in current prices, rose 2.2 per cent in the March quarter, while the non-residential value fell 1.2 per cent, its fifth consecutive quarterly fall.

For the March year, the unadjusted value of all building activity was $10.6b, down 12.6 per cent from the previous year. Non-residential building work fell 9.9 per cent to $4.8b, while residential building activity fell 14.7 per cent to $5.8b.

- Herald Online and NZPA