The amount of building work getting underway is continuing to decline, with the rate it's declining at compared to previous years increasing, according to Statistics NZ's latest survey of the building industry.
This shows the rate of growth in the value of new building projects getting underway, defined as the value of project commencements in any quarter compared to the same quarter in the previous year, peaked at 33.4% in the September quarter of 2022, and then steadily declined.
However, although the rate of growth slowed after the third quarter (Q3) of 2022, it remained in positive territory until Q4 2023. That's although the rate of growth had slowed to just 1% in Q3 2023 and 2.3% in Q4 2023.
Growth then turned negative in Q1 2024 and remained in negative territory for the whole of last year.
Making things worse was the fact the rate at which the value of building work declined compared to the same quarter of the previous year increased in all four quarters last year, from -1.1% in Q1, to -5.3% in Q2, -7.1% in Q3 and -11.6% in Q4. The trend can clearly be seen in the graph below.
Unfortunately that suggests the current downturn in building activity probably hasn't hit the bottom yet.
The decline was mainly driven by residential construction, with growth in that sector turning negative in Q3 2023 and hitting -14.2% in Q4 2024.
By contrast, growth in non-residential building work did not turn negative until Q4 2024, but it hit with a bang at -7.1%.
It may be that the decline in non-residential construction is simply lagging the decline in residential work.
The two types of non-residential buildings suffering the biggest declines in growth were educational buildings, which had negative growth ranging from -19.9% to -29.1% over the last three quarters of last year, and storage buildings such as warehouses, which had negative growth rates of around -20% in each of the last three quarters of last year.
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