New Zealand's total building work fell 6% in the three months through September, extending its decline for the seventh quarter amid a slump in new construction permits.
The total value of building work put in place fell to a seasonally adjusted $2.57 billion in the third quarter, according to Statistics New Zealand. The value of residential building work shrank 6.2% to a seasonally adjusted $1.365 billion in the September quarter, while commercial building work fell 5.7% to $1.2 billion.
"These quarterly falls were mainly driven by falls in the volume of residential work," said Geoff Bascand, government statistician, in his report. "For the second time since this series began in 1989, the seasonally adjusted volume of residential building work put in place is below the volume of non-residential building work put in place."
Rising property prices have helped underpin New Zealand's economic recovery as an influx of expatriates and new migrants in need of housing creates a sellers' market as dwindling building consents kept supply tight. House values rose 1% in the 12 months through November, according to state-owned QV Valuations, though the central bank is cautious about the sustainability of these rises as they remain high relative to incomes.
ASB economist Jane Turner said the recovering "housing market has yet to flow through into a recovery in housing construction," though she expects "housing market has yet to flow through into a recovery in housing construction."
The number of new building approvals surged 12% in October to 1,397 from the previous month, its fourth gain in a row, according to government data, though this has yet to be felt in new construction data. The wider construction sector is still buoyant as it prepares for a strong rebound, and remained the most confident industry in the latest National Bank Business Outlook.
The Reserve Bank will review the official cash rate on Thursday and is expected to keep rates at a record-low 2.5% and reiterate that they will remain at the current level until the second half of next year.