Residential building activity soared by 15% in the March quarter, according to Statistics New Zealand

Residential building activity soared by 15% in the March quarter, according to Statistics New Zealand

The volume of residential building activity nationally soared by 15% in the March quarter, according to Statistics New Zealand.

And that's the highest quarterly rise since September 2002, when there was a 16% surge.

The growth in non-residential activity was actually higher at 17%, giving overall growth in building activity in the March quarter of 16%.

Westpac senior economist Michael Gordon said the increase was well ahead of Westpac's pick of 5% increase for the quarter.

"Previously we saw downside risks to our forecast of 1.1% growth in March quarter GDP; today's release, on its own, suggests that the risk is now to the upside. We'll finalise our forecast next week," he said. 

"We have noted before that the level of building activity was falling behind relative to the pipeline of consented work, and was due for a catch-up at some point.

"However, the increase in the March quarter was well beyond what we would have reasonably expected. The flipside, though, is that it may be a big ask for the industry to have sustained that pace over the June quarter, suggesting some downside risk to the outlook for Q2 GDP."

Stats NZ said the "trend" for residential building work had been rising for 10 quarters, and was 62% higher than the most recent low point in the September 2011 quarter.

However, it was still 10% lower than the series maximum in the June 2004 quarter. 

Stats NZ said both residential and non-residential building activity volumes grew strongly in the March 2014 quarter.

"Overall building activity increased 16% in the March 2014 quarter," business indicators manager Neil Kelly said.

Non-residential building activity volume grew a seasonally adjusted 17%, just ahead of 15 percent growth in residential buildings.

"The trend for all building activity is rising, but the current level is still 5.6% lower than the series maximum in the June 2005 quarter," Kelly said.

In current prices, the unadjusted value of all building activity in the March 2014 quarter was $3.5 billion, comprising $2.2 billion of residential building work and $1.3 billion of non-residential building work.

All building activity this quarter was higher across all areas of New Zealand, compared with the March 2013 quarter.

Building activity in Canterbury, in current prices, increased a seasonally adjusted 25% in the March 2014 quarter, following a 3.8% increase in the last quarter.

Stats NZ said in current prices, the seasonally adjusted changes for building work put in place in Canterbury were:

  • Residential – up 31% (up 12% in the rest of the country).
  • Non-residential – up 16% (up 19% in the rest of the country).
  • All buildings – up 25% (up 17% in the rest of the country).

The "trend" for all building activity in Canterbury continued to grow, led by residential buildings.

Stats NZ said since the June 2010 quarter, the index base period, the value trend for all building activity in the Canterbury region has more than doubled.

Across the rest of New Zealand, the trend rose 15% over the same period. Growth outside of Canterbury has mostly come from residential buildings.

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I'm not really fond of "value" metrics for building activity, as the measure is cost sensitive. Does anyone have an indicator of square metres completed or something like that.