Stadium work lifts commercial building

The redevelopment of Eden Park for the Rugby World Cup 2011 is costing around $240 million. Photo / Dean Purcell

Commercial building consents are hitting new highs, boosted by sports stadium developments.

Figures from Statistics NZ yesterday showed non-residential buildings worth $479 million received consent last month.

That was the second-highest value recorded in any one month since figures were first kept from April 1965, Statistics NZ said.

The highest value recorded in any one month for non-residential building was in April this year when consents worth $530 million were approved.

The $198 million Otago Stadium planned for Dunedin and further work on Auckland's Eden Park for Rugby World Cup 2011 were included in the latest figures, Statistics NZ said.

For almost every month this year, the value of non-residential or commercial building consents exceeded the value of residential consents.

Overall, national building activity is decreasing: the value of consents issued for all buildings last month was $888 million, a 2.3 per cent decrease compared with last May.

"The trend for the number of new housing units authorised excluding apartments continues at a low level although the decline in the trend is showing signs of easing," Statistics NZ said.

Bernard Doyle, Goldman Sachs JBWere strategist, said the rush to build sports stadiums was having a temporary effect on the commercial figures, which also included consents for hotels, hospitals, schools, shops, offices and storage buildings.

"Non-residential consents were strong again but puffed up by the consent of sports stadiums. That said, lumpy projects are part and parcel of non-residential activity," Doyle said.

The building sector's fortunes were being boosted by a combination of factors.

"The saving grace for the construction sector comes from the turn in leading indicators in recent months.

"House sales have bounced off their lows and net migration has turned sharply positive. Today's data hints at recovery feeding through to residential activity, but we cannot be confident of this until single family dwelling activity begins to lift," Doyle said.

Robin Clements, senior economist at UBS, described the latest figures as mixed but said data showed the sector had an improving underlying tone.

A rebound in housing sales had already occurred, so it was not surprising that residential building figures were beginning to pick up.

"The trend for the number of authorised new dwellings, including apartments, rose 2.9 per cent between April and May," he said.

That figure had been increasing since January after falling in every month since July 2007.

Nick Tuffley, ASB chief economist, said house building had been weak since the end of 2007.

But early signs were emerging that the housing market was starting to pick up.

"Typically there tends to be a three- to six-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, particularly relative to recent house sales turnover," Tuffley said.

House prices may have bottomed out and if that was the case, the house-building sector would have more confidence of a recovery.