The volume of building activity fell more than expected in the June quarter but ongoing demand – in particular for residential housing – is expected to support the sector.

The total volume of building activity fell 1.5 per cent in the June quarter after lifting 5.7 per cent in the March quarter, Stats NZ said.

Economists polled by Bloomberg had expected a 1.3 per cent lift.

ASB Bank senior economist Jane Turner lowered her second-quarter gross domestic product forecast to 0.4 per cent from 0.6 per cent after the data.

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"While the softer-than-expected result may weigh on growth in Q2, we expect that continued housing construction demand will provide more support to growth over coming quarters," she said.

The volume of non-residential building activity fell 3.4 per cent, after accounting for typical seasonal patterns and higher construction costs, Stats NZ said.

This followed an 8.2 per cent increase in the March quarter.

"Although the value of building work put in place continued to grow this quarter, the volume of activity failed to keep up with previous seasonal increases, especially after a very strong March quarter," construction statistics manager Melissa McKenzie said.

Residential building activity eased 0.2 per cent after rising 4 per cent in the March quarter.

ASB's Turner noted that quarterly growth in residential construction activity has become slightly more difficult to forecast due to an increased share of apartment and town-house construction over the past year as these projects can be more complicated and lumpy compared to constructing stand-alone houses.

"Residential building consents have proved surprisingly strong and resilient over 2019 and suggest plenty of house building activity remains in the pipeline for the construction sector," she added.

The data comes just after Housing Minister Megan Woods unveiled the long-awaited KiwiBuild reset that includes the creation of a new 'shared ownership' initiative that will allow a would-be homeowner to buy part of a house, in partnership with "long term institutional investors", including community housing providers and iwi.

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It also lowered the requirement for a 10 per cent deposit to 5 per cent when applying for what has been called until now a KiwiSaver HomeStart loan. It will now be known as the First Home Grant.

Also, there will now be no cap on the size of a First Home Loan that can be accessed when a group of people clubs together to buy a home together.

In value terms - not adjusted for cost changes or seasonal effects - the actual value of total building work in the June quarter was $6.2 billion – up 11.8 per cent from the June 2018 quarter.

In the year ended June 2019, the national value of building work was $24.3b, up $2.3b, or 10 per cent from the prior year.