NZ building work volume sinks to decade-low in June

Thursday 8th September 2011 1 Comment

The volume of New Zealand building work put in place fell to a decade-low in the June quarter as construction of new housing sank.

Total building activity dropped 6.6% in the three months ended June 30, following a 6.3% decline in the first quarter of the year, according to Statistics New Zealand. That’s the lowest level since September 2001, before the housing boom really hit its stride in the past decade, and was led by a 12% slump in residential property. Non-residential construction activity fell 1.4%.

The value of home construction sank 11% to $1.28 billion in the period, with new dwellings dropping below $1 billion for the first since June 2002.

“A decline of this extent is surprising,” said Jane Turner, economist at ASB. “Construction activity was already very weak, and we had expected construction activity to remain broadly stable given building consents had started to stabilise over the first half of 2011.”

Still, recent government data showed the number of new building consents issued has been rising in the three of the four months through July, suggesting developers are preparing to ramp up their work.

The Canterbury earthquakes are likely to soak up a lot of the demand after causing an estimated $15 billion of damage to the country’s biggest city.

The value of non-residential building work fell 0.8% to $1.15 billion in the June quarter, led by a 4.7% decline in new commercial building to $310 million. Construction of new factories and industrial buildings climbed almost 50% to $76 million in the quarter.

(BusinessDesk)

BusinessDesk.co.nz

Comments from our readers

On 9 September 2011 at 8:08 am MCNZ said:

The capacity within the industry has been declining for 3 years. With over 2000 Kiwi builders now in NSW and QLD. New Qualification standards for the builders will decrease this even further at the end of the year as the Old boys cant be bothered this will diminsh the capacity even further. Residebtial construction finance is almost non existant, as for the predictions of the thousands of homes to be built next year in Ch Ch, how about you wait for it to stop shaking and then when insurance can be secured we might believe some of the fortune tellers and soothsayers. The numbers of new builds have been steadily declining for 3 years, 2009 was 16000 homes, 2010 14000 homes and 2011 not even 13000. Materials have increased incrementaly and materials handling/Delivery has ratcheted up. Economy of scale has been lost so prepare yourself for a long term housing shortage. The lag for a subdivision is about 4 years and the average home takes 6 months to build. Your not going to knock out houses overnight. NO Surprise to the industry at all.