An increasing volume of residential building in the March quarter has offset a continuing fall in commercial construction, to post an overall lift in all building work of 0.7% across its three month measurement period.
In releasing its March 2010 quarter figures, Statistics New Zealand emphasised that though the trend of all building work increased in the past two quarters, it is still 24% lower than the most recent peak in December 2007.
New home building consents have trended up since early 2009 and the increase in residential work during the March quarter reflects this Statistics said. The seasonally adjusted value of residential building work, at current prices, rose 2.2% in the March 2010 quarter, following a 7.5% rise in the December quarter.
For the March 2010 year, the unadjusted value of residential building work put in place was $5.8 billion, down more than $1 billion or 15% from March 2009. Of this total, new dwellings fell $937 million, and alterations, additions and out-buildings fell $66 million.
The residential market was in state of flux during the first three months of the year after Prime Minister John Key flagged a crackdown on tax advantages of investing in property. Since then, Finance Minister Bill English unveiled the changes in last month's budget, removing investors' ability to claim depreciation on buildings and closing tax loopholes on loss attributing qualifying companies.
Non-residential building work volumes fell 0.8% in the March quarter, its fifth straight quarterly decline. The volume of non-residential building work for the three months through March is now 14% lower than in the previous period and the lowest volume since the March 2004.
Still, ASB economist Jane Turner said "recovery in business investment intentions" makes them optimistic for an increase in first-quarter activity.
"We expect non-residential construction activity to remain around current levels over 2010, initially supported by public projects," Turner said in a note.
"Private activity should pick up later in 2010 as business intentions translate into activity."
For the March 2010 year, the unadjusted value of non-residential building work put in place was $4.76 billion, down $525 million or just under 10% from the previous year. The only sector to see an increase in building values was education which saw a $112 million, or 17%, lift in value.
Annually, the unadjusted value of all building work in place was $10.6 billion, down 13% on the previous year. Residential buildings contributed 55% of this value, down from 56% in the March 2009 year.