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22 June 2010

Homebuilding Looking Up in 2010

If you are interested in how the residential market is shaping up, the report points to positive indicators of employment opportunities and projected housing shortages due to population growth. However no surprises that this will be a slow burn, reflecting a number of fundamentals including recent uncertainty building up to the May Budget, and short term forecasts look well below the 15 year average of 23,500 residential consents PA.

Key themes of the Outlook for the June quarter are:

  • The industry remains cautious about the outlook for the residential sector. Although consents rose in the March quarter, the growth trend flattened. Demand was held back lack of certainty regarding the domestic economic recovery, concerns about rising interest rates and uncertainty surrounding potential changes to the tax treatment of investment property. Despite that, most businesses exposed to the residential sector are reporting higher levels of activity than a year ago.
  • The non-residential outlook has worsened over the past six months. The downward slide in non-residential consents has continued, as a result of high vacancy rates and a lack of development finance. There are early signs that the recent stimulus from publicly-funded building is coming to an end; public non-residential consents were down 12% for the March quarter compared to 2009.
  • The leading indicators still point to a rise in construction activity in 2010, although the pace of the recovery was slow and patchy through the first half of the year. Property investors appeared to be waiting on the sidelines until details of tax changes in the May 20 budget were announced. With the employment outlook now improving and New Zealand’s projected shortage of housing increasing, the fundamentals for an upswing in homebuilding are still in place.

The Building and Construction Outlook for the June quarter 2010 has been published on the Department’s website and is available for download,

What is your experience from the last few months? Are customer enquiry levels on the up?

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