Stats NZ recorded a 16% decline in consents over the year to October, with the annual value of non-residential building work consented at $9.3 billion, down 3.5% from a year before.
Westpac senior economist Satish Ranchhod said the downturn in new development had been passing through to some tough times for many construction firms.
“We expect consent issuance will remain around current levels over the remainder of this year, with related softness in construction activity,” he said.
“But while consent issuance remains low, smoothing through the normal month-to-month swings, the downturn in consent issuance has now found a base, with consent numbers effectively tracking sideways since the start of the year,” he added.
Falling interest rates were cause for some optimism, Ranchhod said.
“Consistent with that, we are hearing anecdotes of increased buyer interest in the housing market and we expect that house prices will begin pushing higher over the coming year.”
But he said it would take a while for the full impact of lower borrowing costs to be felt.
“We don’t expect to see consent issuance turning materially higher until mid-2025, with a lift in construction activity to follow after that.”
On the commercial building scene, new consents for non-residential work were still largely down on last year, he said.
Culum Manson of Mansons TCLM at the new Fifty Albert commercial development in Auckland. An economist says despite some caution about major capital expenditure, there is room for optimism. Photo / Alex Burton
“Developers and owner-occupiers are still cautious about significant capital expenditure, with particular softness in the retail space,” Ranchhod said.
“Even so, we’re continuing to see a reasonable amount of work in the industrial/storage segment. We’re also seeing continued development and refurbishment of office space.”
Stats NZ said the new dwellings consented in October included 1363 stand-alone houses and 1174 townhouses, flats and units.
For apartments, 183 were consented and so were 130 retirement village units.
Stats NZ said the number of dwellings consented each month could vary significantly due to the timing of big multi-dwelling projects, such as townhouses and apartment buildings.
Last week, Stats NZ said construction sector job numbers fell by 5.3% or 11,141 jobs in the year to October 31.
Westpac senior economist Michael Gordon last week told the Herald the construction sector ran hot a few years ago, at an unsustainable pace.
