The building industry continues to defy predictions of a downturn in business, with Statistics NZ estimating building activity rose 3.8% in the September quarter compared to the June quarter.
Residential building work was up 3.1% and non-residential building activity was up 4.9%.
Those estimates remove the effects of inflation, suggesting actual activity levels are continuing to rise.
"In the September 2022 quarter building activity increased across the majority of building types and regions," Statistics NZ construction and property statistics manager Michael Heslop said.
The total dollar value of all building work commenced in the September quarter was $9.309 billion (excluding GST), which was up 33.8% compared to the September quarter of last year.
That included $6.362 billion of residential building work and $2.947 billion on non-residential work - see the graph below for the quarterly trends.
Statistics NZ estimated that residential building costs increased by 3.0% between the June and September quarters of this year, while non-residential building costs were up by 1.5% over the same period.
Westpac Senior Economist Satish Ranchhod said the building sector was continuing to run hot with construction activity at its highest level in decades.
"We expect that building activity will remain elevated through the early part of next year," Ranchhod said.
"Consent issuance has been running at record levels, with especially large numbers in Auckland and Canterbury.
"However capacity constraints, especially shortages of skilled staff, remain a handbrake on how quickly projects can be completed, with build times stretching out.
"That's left us with a large and growing pipeline of work that will continue to support construction activity for some time yet."
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12 Comments
These are projects sold more than a year ago. Williamscorp are laying off a third of their workforce.
Exactly, lagging indicator. Yawn
Actually it's not a lagging indicator. These results are based on a long standing survey of construction companies undertaken by Stats NZ. The results are for work actually commenced during the quarter, so are current for the particular quarter. In this case Q3 2022. Unlike building consents which are a measure of intentions.
It’s effectively lagging because it’s for projects in the 3 months to September. How about an article interviewing some developers? I think that would tell you a lot, although obviously experiences vary. Some big firms are laying off decent numbers of staff.
Any one who works in and around the development sector will tell you new project commencements have slumped over the past couple of months.
But you can keep sucking from the kook aid if you wish.
House prices are dropping like stones and stock on hand is increasing fast. Interest rates also accelerating upwards. Economy looking very sketchy.
Not a good time to buy stock in residential or commercial property developers. Or order a new house.
Construction and real estate oriented businesses will have a tough few years ahead.
Construction is more than just housing.
I dabble in industrial and commercial, that and the public sector are still pricing up and commissioning work like bananas.
Domestic residential might be another story but they still have a good 6-12 months in front of most of them.
I've never turned down more work than in the last 24 months. So maybe in another 12, it'll just be back to normal.
I think the market is currently at a stage where some developers in some sectors are cancelling projects and laying off staff/contractors. But there's still enough work in the system for those people to be redeployed elsewhere. Looking ahead, we may well see things tighten further and a more serious situation develop where there isn't enough work to go around. But it appears we are not there yet.
Construction is like a thin plastic ruler being bent beyond what the manufacturer intended. A little bit more each day until - SNAP!
Only then, everyone notices.
Further excellent news - should help put downwards pressure on rents and house prices
Our business targeted commercial, Iwi, MOE and KO… issue is there are only so many seats at the table
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