House-building work accelerates

House-building demand in Auckland and earthquake reconstruction in Canterbury are expected to remain as key industry drivers. Photo / Mark Mitchell

New figures show quarterly volume rose 5.8 per cent to top $2 billion - the highest level since September 2008.

The house-building sector is experiencing its biggest surge in more than a decade as demand for new places, particularly in Auckland, ramps up.

Figures from Statistics NZ showed building work grew for a sixth quarter in the first three months of the year.

The volume of building work put in place rose a seasonally adjusted 5.8 per cent to $2.02 billion in the three months to March 31, accelerating from a pace of 2 per cent in the December quarter, according to Statistics New Zealand.

That is the highest quarterly volume since September 2008.

The growth was underpinned by a 12 per cent boost in residential activity to $1.1 billion, the biggest increase since September 2002, and accelerating from a pace of 1.6 per cent in December.

"Looking long term, residential building activity has been trending up since September 2011 and is now at a level last seen in late 2008," said industry and labour statistics manager Blair Cardno.

Christina Leung of ASB said the rise in residential construction volumes was stronger than expected.

"Looking at the value of residential construction, increased activity in Canterbury and the South Auckland/Bay of Plenty regions were the key drivers over the first quarter," Leung said. "Meanwhile, residential construction activity also continued to improve in the Central Auckland/Northland region. There has been [an] increase in residential construction in Auckland over the past year, as the acute housing constraints and higher house prices encourage house-building demand.

"We expect earthquake rebuilding in Canterbury and continued house-building demand in Auckland will remain the key drivers of higher residential construction activity over the coming year."

Figures last week showed 17,922 new dwellings have been issued building consents in the 12 months ended April 31, worth $6.66 billion. That is 21 per cent more consents issued than a year earlier, at a 26 per cent greater value.

The building sector is seen as the future driving force of the economy with the $40 billion reconstruction effort in Canterbury and a heating property market in Auckland struggling to meet demand, though that is creating risks to New Zealand's fiscal stability as property values threaten to reach bubble-territory.

Canterbury showed the most growth with all building work rising 23 per cent in the March quarter, compared with 5.1 per cent across the rest of New Zealand. Of that, residential activity gained 21 per cent and non-residential work was up 26 per cent. Total non-residential building work shrank 0.8 per cent in the March quarter to $922 million.

- Additional reporting BusinessDesk