The value of new residential building work and some types of commercial construction, is starting to decline

The total value of building work commenced in the September quarter (Q3) of this year was almost unchanged from the 2022 September quarter.

The latest survey of building activity by Statistics NZ shows $9.293 billion of building work was commenced in Q3, up just 0.1% from Q3 2022.

The latest figures follow seven consecutive quarters of double digit percentage growth when compared with the same quarter a year earlier.

However the figures only measure the value of the work being undertaken and make no allowance for the effect of inflation.

If inflation was factored in, it would be likely that the volume of work being undertaken would be showing a significant decline compared to a year ago.

And some sectors of the construction industry are already showing declines in the value of work being undertaken.

The value of new dwelling starts declined by 4.5% in Q3 compared to Q3 2022, but an 11.5% increase in residential alteration work meant the value of all residential work was down just 2.5% comparted to a year ago.

The total value of non-residential building work, which includes commercial buildings such as shops and offices and non-commercial buildings such as hospitals and schools, was also still in the black, with $3.161 billion of work commenced in Q3, up 5.6% compared to Q3 last year.

However some types of buildings are already showing signs of a slowdown in the value of new starts compared to a year ago, such as hotels/motels -3.9%, retail premises -3.9%, warehouses/storage buildings -6.2%, factories and other industrial buildings -3.8% and farm buildings -12.6%.

There are also significant regional variations in the figures with the value of all new buildings commenced in Auckland in Q3 up 5.6% compared to a year ago, while Waikato showed a 1.2% increase, Wellington was down 17.2% and Canterbury was up 0.6%.

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