Home-building lags to eight-year low

Residential construction fell 6.5% in the three months ended June 30, from the first quarter, based on seasonally and inflation-adjusted figures, according to Statistics New Zealand.

Non-residential construction fell 2.5%, but is holding up, in part thanks to several stadium and "justice system" construction projects. 

Among the biggest projects on the books in New Zealand at present are the upgrade to Eden Park in Auckland, with more Rugby World Cup building spend through to 2011, numerous prisons, and the new Wellington Supreme Court. 

Total, unadjusted non-residential building work put in place in the June quarter was valued at $5.314 billion, up $247 million on the same quarter the previous year, or 4.9%. 

However, contractors' margins and labour rates are under pressure, falling 1.1% in the June quarter Capital Goods Price Index. 

From its peak in September 2007, residential building work has slipped 36.4% as at the June quarter, although the rate of decline slowed in the last nine months. 

Home construction prices, as measured in the CPGI, fell for the first time over the same three quarters, in a further sign of convergence between less negative economic sentiment and housing prices, following recent stability in residential housing prices.