Construction of commercial buildings is declining while residential construction appears to be flattening out

Building activity around the country appears to have peaked, according to Statistics New Zealand's latest quarterly survey of building work.

It found that $6.65 billion of building work was undertaken in the first quarter of this year, down from $6.774 billion in the fourth quarter of last year, and $6.678 billion in the third quarter of 2020.

That suggests total building activity peaked at the end of last year, although the figures are still provisional.

The slight decline in activity has been entirely driven by a reduction in commercial building work, while residential building activity remains at a record high but appears to be flattening.

The value of non-residential building work undertaken was $2.099 billion in the first quarter, down from $2.231 billion in the fourth quarter of 2020 and $2.316 billion in the third quarter of last year.

The value of non-residential building work in the first quarter was lower than in any quarter of 2019, before the COVID pandemic was an issue for the economy.

However the value of residential building work hit a record high of $4.551 billion in the first quarter, but that was up only marginally from $4.543 billion in the fourth quarter of 2020.

In the 12 months to the end of March, a record $16.562 billion of residential building work was undertaken, up 3.4% on the previous 12 months, while $8.36 billion of non-residential building work was undertaken, down 8.9% compared to the previous 12 months.

The biggest declines in non-residential building work were for retail premises, which were down 24.2% in the 12 months to March compared to the previous 12 months, followed by office buildings -21.7%, farm buildings -11.5% and industrial buildings -5.3%.

The Auckland region remains the biggest driver of building activity, accounting for $2.683 billion (40.3%) of all building work undertaken in the first quarter.

However the total value of all building work in Auckland has now declined slightly for two quarters in a row, dipping from $2.73 billion in the fourth quarter of last year and $2.739 billion in the third quarter.

The survey found that residential builders in Auckland were more likely to have been affected by COVID-related problems than those in the rest of the country, with the availability of materials and equipment being a particular problem for new housing projects in Auckland.

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