House building in New Zealand increased by a seasonally adjusted 0.7% in the September 2018 quarter and has been driven primarily by construction in Auckland, according to Statistics NZ.
Residential construction lifted by 1.2% over the same period, which has ‘more than offset’ recent falls in Canterbury, according to acting construction statistics manager Dave Adair. The volume of non-residential construction activity has remained unchanged since the previous quarter.
Residential work in Auckland alone rose by 7% in the June quarter, the largest leap since June 2016, and residential construction accounted for 25% of all building work nationwide in the September 2018 quarter. Nonetheless, Adair says that the figures don’t represent a significant change in activity compared to previous years.
“Auckland residential work picked up in the latest quarter, more than offsetting recent falls in Canterbury,” he stated. “While this quarter’s overall construction volume recorded a new high, construction activity has been around this level for two and a half years.”
ANZ reported earlier in November that new-build mortgage lending had hit a four-year high, with new-build growth overtaking growth for existing homes. Existing homes have remained the most popular option however, with new-builds still accounting for a relatively small percentage of all lending.
“New build lending doesn’t account for a massive percentage of our own lending, but it has certainly increased over the last few years,” mortgage adviser Craig Pope of Pope & Co Mortgages told NZ Adviser. “We’ve also noticed that more investors are now looking at new builds as an option.”
“However, new builds are still quite an expensive option; the KiwiBuild scheme will obviously keep a cap on the cost, but for a lot of areas, the land and the cost of building is still quite expensive. So while there has been a slight increase, the option is still out of reach for a lot of homebuyers until the KiwiBuild scheme kicks in.”