The value of new residential and non-residential building activity is continuing to rise strongly

The value of new residential and non-residential building activity is continuing to rise strongly

The value of building work being undertaken continues to rise, with Statistics NZ's September Quarter Survey of Building Work Put in place recording $6.523 billion of new building work in the September quarter, up 4.7% compared to the June quarter and up 11.6% compared to the September quarter of last year.

That was made up of $4.092 billion of residential building work (up 8% on Q3 2018) and $2.43 billion of non-residential building work (up 18.3% on Q3 2018).

In the 12 months to September $24.943 billion of new building work was put in place, up 11.8% on the previous 12 months.

The biggest increase was in Waikato where $604 million of new building work was commenced in Q3 2019, up 17.7% on the same quarter of last year, followed by Wellington Region $532 million (+15.0%), Auckland $2.748 billion (+14.9%), while Canterbury recorded $947 million (+1.0%).

In the non-residential construction market, the biggest increase in Q3 this year compared to Q3 last year was for hotels, motels, boarding houses and prisons +41.3%, followed by retail premises +35.1%, warehouses and other storage facilities +28.5%, factories and industrial buildings +21.4% and cultural and religious buildings +19.7% and hospitals and nursing homes +14.7%.

The only sectors to record lower building work in Q3 this year compared to a year earlier were educational buildings which were down by 3.7% and residential building alteration work which was down 1.3%.

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12 Comments

I thought it had been made pretty clear in an article in The Herald that we are now building too many houses - Kumeu average prices down $500k as there is an over supply in that area now. Heard similar stories about Hobsonville point on this website where developers are holding back completed properties so asnot to flood the market. Unless it’s new builds at the very low end of the market or Housing association building as this is where the real shortage is, then we are certainly heading for a serious over supply issue.

Great to see interest.co report on building activity.
Clearly "housing shortages" are a current driver in the Auckland market with report stock (properties for sale) down 22% YOY.
However, building activity and additional housing is got to overcome the headwind of demand created by continuing high level of immigration.
While its great to see affordability issues being addressed by new construction, there is equal need to address the current very high levels of immigration if we are to see affordability to significantly improve.
Recent interest.co report on increase of new housing in Auckland was just sufficient to probably meet needs of immigration without meeting needs of shortage of supply.

It's going to be interesting to see which one of the above situations is actually correct. As I've said before, I have my doubts about an overall shortage, judging by the situation on the ground in Auckland, opposed to what is being reported in media. At the least expensive end, yes a shortage, but it seems nobody can build housing inexpensive enough for that in the current market conditions.

I agree.
One just has to go to Flat Bush, Papakura, Kumeu, etc, etc to see that we are absolutely awash with new supply. I suggest anyone who has doubts about this go look for themselves in such areas.
Yes, we have tight conditions in the urban center. However this is not the case on the fringe.

Who is going to buy all these places, given their high price and remote location? 2 bedroom shoeboxes in Huapai for 640K? Really? 4 bedroom homes for $1.1 million? Really?
They should be 450K, and 800K, respectively...
Shocking commutes out to those locations.

Funnily enough, brand new 4 bedroom houses in Huapai on 400sqm are now sub $880k.
Land is being discounted. Finally.

Sounds like a bubble issue. Soon it's going to be a credit capability issue. Heaps of demand but where is the money to lend out coming from???
Not out of my pocket, that's forsure!

A point of common confusion - the 'shortage' of housing is based on the concept that people would occupy houses in the same way they did in 2006. However (surprise, surprise) when prices go up then people change the way they occupy houses (adult children staying at home; fhb taking in flatmates). So the shortage is dependent on lower prices. - and for those that think house prices will increase; if we are building enough to overcome previous ratios of people/houses why would prices go up?

But we have been building them in the wrong places.. Who wants to commute from Hobsonville point or Kumeu if there are more central options.

Seems to be plenty of infill housing being built around my way, heaps of it is Housing nz stuff, but private projects too. The undersupply is being eroded, or maybe we are already caught up. All depends on the assumptions you make about occupancy levels.

Tonnes of infill happening through certain parts of St Johns.
It seems to typically be mid to mid-high value locations, where there is a lot of old / poor housing stock sitting on relatively high value land. In these areas, the low capital to land value ratio means sites are ripe for redevelopment.

A key issue is not enough lower priced housing is being built.
Its all down to the economics.
If people can bowl one house and build 2-3 large townhouses, and make pretty much the same profit as building 5-6 small 2 bedroom units, then of course they will tend to do the former.

This is the kind of thing this country needs, more housing to boost GDP, more immigrants to fill the housing and boost GDP, leading to more demand for housing. Perfect economic genius from the CoL.

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