Master Builders Confirm Weak Construction Sector
31 August 2010
Registered Master Builders Confirm Weak Construction Sector
The Registered Master Builders Federation (RMBF) says that the figures released today by Statistics New Zealand confirm what it has been predicting for some months in that the small recovery in the residential construction sector that occurred late 2009 and earlier this year has stalled and reached a plateau. Figures show the number of new housing units increased by 3.1% in June (including apartments) but if apartments are excluded the number of new home starts decreased by 5.3%.
RMBF CEO Warwick Quinn says that the projections at the start of the year by some commentators that new residential builds would reach 20,000 was now impossible to achieve and the sector is currently just managing to maintain volatile consent numbers.
“The new build residential market has hit a plateau over the last few months and it is looking like consent numbers will remain there in the foreseeable future. There is still a significant amount of nervousness by consumers who have been heavily impacted recently by rises in the official cash rate, material price movements, pending GST increases, changes to depreciation and tax for investment properties and a sluggish wider housing market.”
Mr Quinn says that the outlook for non-residential properties continues to be a bleak one. The NZIER’s latest report predicts potential job losses in this sector of up to 20,000 if things don’t improve. Mr Quinn believes the numbers of job losses will depend on how long a tail the current construction projects have to run. If activity picks up in the interim then resource can be redeployed to other projects. Building consent numbers for non-residential construction have been falling steadily since mid 2009 after being buoyed during the recession with investment in public infrastructure such as sports stadiums, airports and the like. However, this spending has come to an end and 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 yet.
The regions with the largest increases for new housing in July were Auckland, Canterbury, Waikato and the Bay of Plenty with Otago experiencing the largest decrease.