Expected construction growth slow to take hold

CATHERINE HARRIS
Last updated 10:38 31/08/2012
Construction
Fairfax NZ
IN THE WINGS: While new building industry figures indicate meek growth, experts are still counting on a gradual pick-up in construction.

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Economists say fresh statistics show the building sector is still on course for improvement, despite a relatively limp month.

In July 1478 new-dwelling consents were approved, up a seasonally adjusted 2 per cent on the previous month and 26 per cent higher than a year ago.

July's increase was driven by a rise in apartment numbers to 235.

It was the highest month for apartment consents since May 2009 but due in large part to an increase in retirement units.

Excluding apartments, residential consents were down 2.5 per cent for the month.

"We continue to think that a gradual pickup in construction from near 20-year lows, reinforced by the gearing up of the Canterbury rebuild, will make a positive contribution to what otherwise is still shaping up as a modest near-term growth outlook," said Deutsche Bank's Darren Gibbs.

ANZ economist Mark Smith said the data was in line with expectations, but off historically low levels. Consents were around 35 per cent below the historical average.

Trend-wise the figures pointed to an easing off in residential activity but overall construction work was heading upwards, he said. "We expect consent issuance to continue strengthening over the remainder of the year."

Canterbury was the standout region for dwelling consents. Over the last three months Deutsche Bank said its numbers had jumped 86 per cent on a year earlier, nearly eclipsing those in Auckland. By comparison, housing consents had risen nearly 22 per cent in Auckland on the same basis, and 19.4 per cent in Wellington.

Nationally, consents had risen nearly 13 per cent, excluding Canterbury.

Non-residential consents were down slightly, by 2.5 per cent on the previous month, and flat for the year.

The value of non-residential building was $346 million, almost identical to a year earlier, with Canterbury contributing $41m.

Smith said the Reserve Bank would be watching construction costs. Residential costs rose 3.2 per square metre in the three month to July compared with a year ago.

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