The latest GDP figures released today have underlined the importance of construction activity to the economy.
Statistics NZ said GDP increased by one per cent in the March quarter of this year, with the construction sector responsible for two-thirds of that growth.
Construction activity grew by 12.5% in the quarter, its biggest increase in 14 years.
Although Statistics NZ said growth in construction was strong throughout the country, its quarterly Value of Building Work Put in Place survey released earlier this month, suggests construction growth is largely an Auckland and Christchurch story.
It showed that the total value of building work throughout the country was $3.521 billion in the first quarter of this year, up $687 million (24%) on the first quarter of last year.
But between them Auckland/Northland and Canterbury accounted for 84% of that growth.
Building work in Canterbury increased by $299m to $986m in the first quarter of this year compared with the same period last year, while in Auckland/Northland it increased by $279m to $1.272b over the same period.
In Wellington the increase was much more modest, with building work rising from $324m in the first quarter of last year to $333m in the first quarter of this year, an increase of just 2.8 %.
The sector showing the biggest increase was residential building work in Canterbury, which jumped by $252m to $633m between the first quarters of 2013 and 2014.
Non-residential building work in the region grew at a more sedate space, increasing from $306m in the first quarter of last year to $353m in the first quarter of this year.
Residential construction also accounted for the lion's share of building work growth in Auckland/Northland, up by $165m (27%) to $774m in the first quarter of this year compared with the same period last year.
3 Comments
Makes sense that construction is only occuring on chch and auck.
I expect this to continue for the next few years or more.
If you have limited resources (constuction workers, materials), you'll target the regions where the margins are greatest (where house prices are highest).
What I expect to see is housing shortages emerging in secondary cities that developers over look or simply refuse to build in while better offers are available in chch and auck. I've already mentioned on here a number of times, supply-demand shortages are already worse than auck in some places such as p.n based on number of listings per capita. The low prices due to lack of speculative gambling by FHBs (as seen in auck) means these shortages will worsen while auck/chch gets all the attention.
Banks are stung and react quickly when the truth is pointed out in the public arena that Regional areas are struggling economically and that continued OCR hikes will affect regional centres negatively
Banks are stung and react quickly when the truth is pointed out in the public arena that Regional areas are struggling economically and that continued OCR hikes will affect regional centres negatively
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