RMBF confirms weak construction sector

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The RMBF says Statistics New Zealand figures released at the end of last month confirm that the small recovery the construction sector experienced in late 2009 and early 2010 has stalled.
Figures show the number of new housing units increased by just 1.7% in June (excluding apartments) after a decrease in May.

RMBF chief executive Warwick Quinn says the projections at the start of the year by some commentators that new residential builds would reach 20,000 was now highly improbable as the sector is currently just managing to maintain volatile consent numbers.

“The new build residential market has hit a plateau over the past few months, and it is looking like consent numbers will remain there in the foreseeable future,” Mr Quinn says.
“There is still a significant amount of nervousness by consumers who have been heavily impacted recently by rises in the official cash rate, material price movements, pending GST increases, changes to depreciation and tax for investment properties, and a sluggish wider housing market.”

Mr Quinn says while additions and alterations are holding up well, the outlook for non-residential properties is bleak.
“Building consent numbers for non-residential construction have been falling steadily since mid-2009 after being buoyed during the recession with investment in public infrastructure such as sports stadiums, airports and the like.
“However, this spending has come to an end, and there are few major commercial consents in the system.”

Mr Quinn believes until the recovery is well entrenched and investors are confident with tenant demand and finance is available, this sector will remain flat for some time yet.
The regions with the largest increases for new housing in June were Canterbury and Auckland, while Hawkes Bay experienced the largest decrease.

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