House-building recovery picked for 2010

PICK UP: The residential building market is expected to recover this year.

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New Zealand's slumping residential construction market is projected to recover this year, with the government department responsible for building permits projecting up to 20,000 new houses will be built this year.

In its building and construction outlook for the March quarter, the Department of Building and Housing said more houses would be built than last year, though the rate of building would probably fall short of the levels in 2005 to 2007.

``Even if progress is slow and housing consents only reach 18,000 by year end 2010, this would still represent a 25 percent increase on 2009 levels,'' the department said. 

However, slowing migration and rising interest rates could cause the apparent boost to the industry to unwind, the report said. 

``We would stress that very few industry participants are expecting another boom period in 2010 (ie new housing levels of 25,000+). Unless there is a more significant improvement in economic conditions and consumer confidence, a modest recovery appears to be the most likely scenario,'' the department said.

Another potential warning sign was in the non-residential sector, which was showing signs of weakness after four years of growth, it said.

Following Real Estate Institute of New Zealand (REINZ) data, the department said the housing market had regained much of its lost confidence, with house prices in Auckland and Wellington increasing slightly. Other key statistics _ days to sell and number of sales _ had also improved in the main centres. 

In the three main regions last December, houses took less than 30 days to sell, compared to 43 days a year earlier.

Despite the shortage, rental prices nationwide had been largely stable, even in Auckland, which had received a large influx in new immigrants. The only significant average rent increase had been in Wellington, the department said.  

``Peculiarities of the landlord-tenant relationship'' meant the information regarding rents reflected  inflation rates, rather than peaks and troughs in the housing market, it said.

- NZPA