New Zealand's house building activity shrank in the first three months of the year as most new work was largely in non-residential construction.

The value of residential work put in place fell a seasonally adjusted 1.5 per cent to $1.35 billion in the three months ended March 31 from the previous quarter, while non-residential construction rose 1.8 per cent to $1.15 billion, according to Statistics New Zealand. That left the value across all buildings unchanged at $2.5 billion.

"The overall decrease in the March 2012 quarter was due to a fall in residential work, which more than offset a rise in non-residential work," industry and labour statistics manager Blair Cardno said in a statement.

"Building activity in Canterbury showed signs of picking up after the earthquakes, particularly for non-residential building work."


The value of actual work done lagged the pace of new building issuance as companies prepare to ramp up construction investment.

Last month's National Bank Business Outlook showed optimism in both residential and commercial construction investment intentions.

"We expect a modest improvement in residential building activity over the coming year, in light of the increase in dwelling consent issuance in recent months and signs of housing supply constraints in some regions such as Auckland and Christchurch," ASB economist Christina Leung said in a note.

"The subdued level of construction activity adds to the case for little urgency for an official cash rate increase."

The value of new dwelling work put in place shrank 3.8 per cent to an unadjusted $978 million in the March quarter from the same period a year earlier, was 15 per cent lower on an annual basis at $4.05 billion.

Factories and industrial building construction reported the biggest growth in non-residential construction, up 38 per cent to $116 million, for a 22 per cent annual gain $434 million.

Commercial building construction rose 7.7 per cent to $277 million in the quarter, and was up 7.5 per cent to $1.37 billion on the year.