Waikato building activity slumps

The Government should move to bolster the building industry before more jobs are lost, the Registered Master Builders' Federation says.

Waikato Master Builders president John MacDonald supports the calls from Federation head Brent Mettrick as the Waikato is hit hard by the building slump. The Waikato will have fewer than 1000 homes built this year compared to last, with a 30 per cent drop in the number of new building consents issued for the year ended September 2008, compared to the same period last year.

Auckland and Canterbury are also feeling the pain with the number of consents issued dropping by 22 and 26 per cent respectively, according to Statistics New Zealand. Consent numbers for new homes nationally are now 41 per cent lower than the middle of last year.

"We would like to see additional stimulus by the Government, and the time to do it is now," Mr Mettrick said.

Despite talk about cutting compliance costs, nothing had filtered through to the market, he said.

Mr MacDonald said a lot of builders had either gone overseas or had left the industry. When the market did pick up again there would not be enough skilled builders.

"There's not a lot of people looking for jobs out there."

The Government needs to step in and commission work for new schools and roading to boost the economy, Mr MacDonald said.

Several house-building companies and small contractors in the Waikato had already gone under this year. But Mr MacDonald said the majority of building firms in the region were "fighting it" at the moment. Construction costs have stayed high, with more expensive materials offsetting lower labour costs.

The outlook for housing remains "bleak", ASB Bank economists said, with home building likely to keep falling into next year. However, commercial and other non-residential building work remains strong, boosted by education building work by the Government.

House prices and interest rates are falling, making new homes more affordable. But migration is slowing and banks are getting tougher on lending, so economists did not expect housing to pick up till next year.

Borrowing for home loans was almost at a standstill, growing just 0.2 per cent in September, according to Reserve Bank figures. That reflected falling house prices, a drop in house sales and a fall-off in building.

Home loans had been growing $1 billion a month at least for the past five years or so, before hitting a wall in April.

Business lending growth remained steady, up 10 per cent in the past year, with trading banks picking up the decline in lending by finance companies.

Consumer lending growth has also slowed sharply, up 2.5 per cent in the past year, just half the rate of inflation, to $12.7 billion.

ASB Bank economists said lending growth in all sectors was likely to slow as plans were put on hold because of global financial turmoil, uncertainty and a grim outlook.

- © Fairfax NZ News