Builders Confirm Volatile New Housing Demand
29 June 2010
Registered Master Builders Confirm Volatile New Housing Demand
The Registered Master Builders Federation (RMBF) says that the figures released today by Statistics New Zealand confirm that the recovery being experienced in the new housing sector continues to be very fragile. Figures show the number of new housing units fell by 9.5% in May (excluding apartments) after an increase in April and a decrease in March.
RMBF CEO Warwick Quinn says that while the winter period is traditionally slow, the number of new dwelling consents has been volatile since the Government signalled changes in February to depreciation and tax on investment properties. Mr Quinn says “we noticed an immediate drop off in public enquiry once these announcements were made and while April showed growth the most recent figures, which coincided with the budget and confirmation of the policies, is a reflection of the market remaining weak”.
“There are a number of economists predicting a growing housing shortage which will increase volumes but at this time the construction sector is still some way from being out of the woods” Mr Quinn says. “Increasing interest rates and GST along with wood products and steel price rises are all affecting home affordability and this is manifesting itself in a volatile demand for new housing.” The short term outlook is still uncertain with consent numbers at very low levels. The outlook for the non-residential construction is bleak with this sector showing a 17% fall in consents compared to May 2009. Mr Quinn says “Non-residential construction was held up during the recession with investment in public infrastructure such as sports stadiums, airports and the like but with these coming to completion there are few major commercial consents in the system”. Mr Quinn believes until the recovery is well entrenched and investors are confident with tenant demand and finance is available this sector will remain flat for some time.
The regions with the largest increases for new housing in May were Canterbury, Waikato and Wellington while Auckland and the Bay of Plenty experienced the largest decreases.