Confidence builds in construction sector

JAMES WEIR
Last updated 05:00 01/11/2012

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Wellington building consents hit 119 in September, almost double the levels seen in the same month last year, as national house building figures improve from last year's big slump.

Building consents in the Wellington region were up by 83 per cent, or 54 houses and flats, compared with September last year.

Although some builders are busy, others say the market is still tough and demand patchy.

House building consents in the Wellington region were worth $76 million in September, the highest total for the past 12 months.

Nationally, building consents for September jumped strongly, by almost 8 per cent, compared with August. That was supported by rebuilding in Canterbury, more work in Auckland, and a flurry of new retirement units, but elsewhere demand was flat.

At 16,000 new houses and flats consented in the past 12 months, overall levels remain low and are well short of the estimated 20,000 to 25,000 new homes the industry believes the country needs each year.

Auckland and Canterbury were the only regions with rising house prices which generated more building to meet a shortfall in supply, according to Master Builders chief executive Warwick Quinn.

"There's potentially a genuine housing shortage in Auckland; with the pressure of numbers moving into Auckland it is putting pressure on house prices," he said.

Wayne Robinson, a senior estimator at Wellington-based Holmes Construction, said work was picking up "very slightly, but the work being done is on extremely tight, if any, margins".

The region still depended heavily on the government sector, and that was continuing to be trimmed.

There was intense competition for commercial work. "It's by no means a nice environment."

The market was a little better than 2011, and there was a "steady flow" in structural earthquake-strengthening jobs in commercial buildings in Wellington, so that would make a difference for the sector.

Braden Cameron, Wellington franchisee for residential building company Landmark Homes, said the firm was very busy.

"We have a lot of stuff we have been working on for a long time that is turning into actual jobs," he said. This included seven new homes and nine big renovation jobs on the go.

People seemed to be getting the confidence to move ahead on design work, and signing contracts. They were sick of waiting to build and realised interest rates were likely to stay low for some time.

Landmark built new homes but also did renovations, and both areas were strong. They were also involved in recladding leaky homes, and a lot of remedial work was under way.

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CONSENTS RISING

In September, 1520 new homes and flats were consented nationally, including 186 apartments.

Of those, 115 were retirement village units.

The seasonally adjusted number of new dwellings consented, including apartments, increased 7.8 per cent.

Excluding apartments, there was a 5.6 per cent increase in new homes.

In September 2012 compared with September 2011, Canterbury and Auckland regions had the largest increases in the number of new dwellings consented, up 176 and 152, respectively.

Source: Statistics NZ

- BusinessDay.co.nz

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