Building expands for 6th quarter in biggest residential spurt in a decade

New Zealand's building work grew for a sixth quarter in the first three months of the year, spurred by the biggest expansion in residential construction in more than a decade.

The volume of building work put in place rose a seasonally adjusted 5.8 percent to $2.02 billion in the three months ended March 31, accelerating from a pace of 2 percent in the December quarter, according to Statistics New Zealand.

That is the highest quarterly volume since September 2008. The growth was underpinned by a 12 percent boost in residential activity to $1.1 billion, the biggest increase since September 2002, and accelerating from a pace of 1.6 percent in December.

"Looking long-term, residential building activity has been trending up since September 2011 and is now at a level last seen in late 2008," industry and labour statistics manager Blair Cardno says in a statement.

Figures last week showed 17,922 new dwellings have been issued building consents in the 12 months ended April 31, worth $6.66 billion. That's 21 percent more consents issued than a year earlier, at 26 percent greater value.

The building sector is seen as the driving force of the economy in coming years, with the $40 billion reconstruction effort in Canterbury and a heating property market in Auckland struggling to meet increasing demand, though that is creating risks to New Zealand's financial stability as property values threaten to reach bubble territory.

Canterbury showed the most growth, with all building work rising 23 percent compared to 5.1 percent across the rest of New Zealand. Of that, residential activity gained 21 percent compared to 11 percent for the rest of New Zealand and non-residential work up 26 percent compared to a drop of 4.5 percent.

Total non-residential building work shrank 0.8 percent to $922 million from growth of 2.5 percent in December.

The unadjusted value of all building work rose 22 percent to $2.84 billion in the March quarter from the same period a year earlier, for annual growth of 15 percent to $11.28 billion. Of that, residential work rose 33 percent to $1.68 billion at an annual pace of 21 percent to $6.45 billion.

New dwellings jumped 40 percent to $1.37 billion for annual growth of 26 percent to $5.1 billion.

Non-residential building work increased 9.4 percent to $1.15 billion for an annual gain of 6.7 percent to $4.83 billion.

(BusinessDesk)