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17 February 2010

Is the Recession Nearly Over for the Building Industry?

While expectations are higher for 2010 than the previous 12 months, not many people are jumping for joy. New Zealand's slumping residential construction market is projected to recover this year, with DBH projecting up to 20,000 new houses will be built this year. The DBH report 4 four key themes covering value of consents, dwelling consents, migration levels, regional activity and finance affordability.

  1. The slump in residential building activity has bottomed out
  2. The industry remains uncertain about the strength and sustainability of the residential recovery
  3. The non-residential sector is showing signs of weakness
  4. Total building activity should rise in 2010.

Getting to 20,000 new homes (the unofficial benchmark for a sustainable industry) is a big stretch for this year. And while 2009 is behind us, it is worthwhile reflecting on how dramatic the downturn was, as reflected by Crane Group, and Fletcher Buildings latest financial results to 31 December, with Fletcher Buildings reduced profit coming off the back of reducing 15% of its 16,500 workforce in the last year. Both point to a very tough financial year and a cautious approach to a more stable but slow growing industry.

The January 2010 Infometrics Update provides an update based on stats to December 09, and give us an idea of what indicators to watch closely, rather than a definitive roadmap.

If you have any comments or suggestions for other articles/publications – leave a comment below.

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