House Building Surges

By | May 29, 2009

29 May 2009

Source: Business Day

Residential building activity surged 11 percent last month in further evidence that the housing market slump may have levelled off.

Statistics New Zealand said today that approvals to build 1009 new dwellings were given in the month. The seasonally-adjusted 11 percent rise this figure gives follows a 1.7 percent drop in March.

Excluding apartments, there were 810 new residences approved for construction during April, which is a 4.5 percent seasonally-adjusted rise on the previous month.

Building activity has been slumping since mid-2007, falling about 45 percent from the very high levels seen during the housing boom in the middle of the decade. In the year to April building consents worth $5.34 billion were issued, which is 31 percent lower that the figure for the previous 12 month period.

Today’s figures will add weight to the belief that New Zealand has now seen the worst of a recession that it has been in since the start of 2008.

The National Bank’s monthly survey of business opinion out this week showed a continued rise in optimism among firms.

Some economists believe that there will be quite a strong bounce in construction later this year. Those believing this cite a big turnaround in migration statistics, with few Kiwis leaving the country to live and still increasing – albeit slowly – numbers of foreigners coming here. A key driver of the strong housing market in the earlier 2000s was a big inflow of migrants in the wake of the 2001 terrorist attacks in the US.

While house prices have dropped on average about 10 percent from their peaks of a few years ago, recent real estate figures have shown a levelling in prices and a strong bounce-back in the number of houses being sold.

ASB economist Jane Turner took a cautious view of the latest figures, saying that the construction sector was still very weak.

She believed, however, that residential building consent figures were likely to improve further over the next few months, in line with the pick up in house sales.

“The turn around in population growth, stabilising house prices and lower interest rates are likely to help lift construction demand off its lows,” she said.

“Nonetheless, economic uncertainty and rising unemployment are likely to be factors that will limit the degree of recovery in housing construction.”
Residential building activity surged 11 percent last month in further evidence that the housing market slump may have levelled off.

Statistics New Zealand said today that approvals to build 1009 new dwellings were given in the month. The seasonally-adjusted 11 percent rise this figure gives follows a 1.7 percent drop in March.

Excluding apartments, there were 810 new residences approved for construction during April, which is a 4.5 percent seasonally-adjusted rise on the previous month.

Building activity has been slumping since mid-2007, falling about 45 percent from the very high levels seen during the housing boom in the middle of the decade. In the year to April building consents worth $5.34 billion were issued, which is 31 percent lower that the figure for the previous 12 month period.

Today’s figures will add weight to the belief that New Zealand has now seen the worst of a recession that it has been in since the start of 2008.

The National Bank’s monthly survey of business opinion out this week showed a continued rise in optimism among firms.

Some economists believe that there will be quite a strong bounce in construction later this year. Those believing this cite a big turnaround in migration statistics, with few Kiwis leaving the country to live and still increasing – albeit slowly – numbers of foreigners coming here. A key driver of the strong housing market in the earlier 2000s was a big inflow of migrants in the wake of the 2001 terrorist attacks in the US.

While house prices have dropped on average about 10 percent from their peaks of a few years ago, recent real estate figures have shown a levelling in prices and a strong bounce-back in the number of houses being sold.

ASB economist Jane Turner took a cautious view of the latest figures, saying that the construction sector was still very weak.

She believed, however, that residential building consent figures were likely to improve further over the next few months, in line with the pick up in house sales.

“The turn around in population growth, stabilising house prices and lower interest rates are likely to help lift construction demand off its lows,” she said.

“Nonetheless, economic uncertainty and rising unemployment are likely to be factors that will limit the degree of recovery in housing construction.”