Building pace picks up

The volume of residential building work in the first quarter of this year grew a seasonally-adjusted 15%, the biggest increase since September 2002.

The value of the work grew 17% to $2.36 billion.

There is a growing number of consents being issued in Auckland and Christchurch. But all building activity this quarter was higher across all areas of New Zealand, compared with the March 2013 quarter. 

Westpac’s economists said the level of building activity was still about 5% below the peak reached in the middle of last decade's boom.

“We expect it to exceed that level in this cycle, as the Canterbury rebuild evolves and as housing construction picks up in the rest of the country.”

Senior economist Micahel Gordon said: "Previously we saw downside risks to our forecast of 1.1% growth in March quarter GDP; today's release, on its own, suggests that the risk is now to the upside. We'll finalise our forecast next week. We have noted before that the level of building activity was falling behind relative to the pipeline of consented work, and was due for a catch-up at some point.”

He said: “The increase in the March quarter was well beyond what we would have reasonably expected. The flipside, though, is that it may be a big ask for the industry to have sustained that pace over the June quarter, suggesting some downside risk to the outlook for Q2 GDP."