Building work projected to continue rising

KASHKA TUNSTALL
Last updated 12:55 08/11/2012

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Fletcher Building expects New Zealand building activity to outpace that in Australia over the next year.

Fletcher Building's general manager of investor and media relations Philip King said the listed company is forecasting New Zealand residential and commercial consents to continue modestly increasing while Australian residential activity could see more volatility and commercial construction is likely to remain subdued.

Infrastructure is the only construction area where Australian building is expected to remain steady, he said.

''What we're seeing is Australia has been slowing down over the last 15 months in their new housing consents and New Zealand has been picking at the same time. 

''Australia has quite strong housing over the last several years where New Zealand reached all time lows with its housing, exacerbated of course with what has happened in Canterbury.''

But the sector has strengthened over the last financial year and New Zealand's number of issued residential consents has increased 14 per cent, from 13,539 for the year to June 2011 up to 15,414 for the 12 months to June this year, according to Statistics New Zealand.

Over that same period Australia saw a 12 per cent decrease, from 164,251 in the 12 months to June last year dropping to 145,057 in the 12 months to June this year, Australian Bureau of Statistics reports. 

''Now, we've got the situation where accommodation in Canterbury is ready to be rebuilt and is gaining momentum, the Auckland property market is picking up and residential consents in New Zealand are starting to grow quite reasonably whereas Australia has seen a pronounced slowdown,'' King said.

The Australian slowdown is due to the global economy, geopolitical influences, the mining boom and higher labour costs, he said.

With the tough economic condition of the last few years, King believes New Zealand's strength has been that  government spending has assisted the overall  stability of the construction industry.

''Over the last several years there has been an increased spending in core infrastructure like and that increased level of construction spend has really underpinned the whole construction industry,'' he said.

''That's been vital because we've seen residential construction at all time lows and commercial construction subdued as well ... without that it would have been very tough times.''

 The Government released the Building Infrastructure progress report last week which sets out 67 infrastructure initiatives being undertaken to help build a more competitive economy.

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It reaffirmed a set budget of $5.5 billion for the Canterbury Earthquake Recovery Fund and  $12.2 billion for roading between 2012 and 2015.

''The future outlook means the level of work going forward over the next few years is going to be substantially better,'' King said.

And though there are not acute shortages of tradespeople in Canterbury at the moment, the outlook maybe be impetus enough to bring a few Kiwis home to meet demand for skilled workers in the industry as major construction gets underway, he said.

''We've been a major exporter of workers to Australia in the last year alone so you might see that turn around and there are tales with some of the large mining resources firms over there cancelling projects,'' King said.

''Labour is freeing up [in Australia], they've had significant labour cost increases over there in the last year which we haven't see in New Zealand so I think it'll be an interesting one to watch... we might see some Kiwis come home.''

- Waikato

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