KEY POINTS:
House building in the $12 billion construction sector will recover soon, according to a report out yesterday from consultants BIS Shrapnel.
The business released a study of New Zealand's building market which predicted the sharp downturn in new house starts would end and recovery would start in the
first three months of next year.
Adeline Wong, BIS Shrapnel senior project manager, said: "We expect weak dwelling approvals to persist for the whole of 2009 before a modest rebound in the March quarter of 2010.
"A combination of strengthening economic growth, low interest rates, improving home affordability, pent-up housing demand, higher net overseas migration levels and an expanding housing stock deficiency will drive a strong rebound in dwelling consents in 2010/11 and 2011/12 before stabilising over the following two years to 2013/14," Wong said.
Statistics New Zealand recorded that in December new house starts slumped to the lowest level in more than 20 years.
In 2003, house-building reached a peak this decade when 25,506 houses got building consent, but that fell to 16,158 last year. Including apartments, 29,914 residential dwelling units got approval in 2003 but that fell to 18,456 dwelling units last year.
The trend has builders extremely worried. Registered Master Builders Federation chief executive Warwick Quinn said builders were laying off staff because there was no work in front of them.
But BIS Shrapnel's Wong said Auckland's house-building sector would soon bounce back.
"The Auckland region will suffer a substantial housing stock deficiency over the next five years as a result of under-building. Dwelling approvals for the Auckland region peaked in 2003 at 12,500 units and have been falling ever since with record lows of below 4000 units expected to be reached in 2008/09.
"Auckland has the lowest home affordability due to high median house prices, so significant pent-up demand for houses is also expected to have built up in the region over the past few years." That would drive the next rise in building activity, expected from 2010 and 2011, Wong said.
Infrastructure spending of $5.8 billion was expected in the next five years and this would help civil engineering to expand by more than 10 per cent annually, Wong said, citing Meridian's development of five wind farms and Contact Energy's Waitahora wind farm near Dannevirke.
