Latest Statistics NZ figures suggest building activity peaked in Q3 2022 and started to decline in Q4

By Greg Ninness

The building industry is showing the first signs of a downturn, although it is continuing to operate at a cracking pace, according to the latest building activity report from Statistics NZ.

It found $9.327 billion of new building work was commenced in the December quarter of last year.

That was a record high and was up 19.7% compared to the same period of 2021.

However it was up by just $20 million compared to the September quarter of last year, suggesting a slowdown in the rate of growth.

Additionally, the building industry has been experiencing high inflation, with residential building costs up 13% last year and non-residential building costs up 10%.

When the effects of inflation are removed, the value of building work commenced in the December quarter of last year declined by 1.7% compared to the September quarter, with residential building work down by 2.0% for the quarter, and non-residential work down by 1.0%.

Those figures are provisional, but suggest building activity peaked in the third quarter of 2022 and started to to decline in the fourth quarter.

However in an industry facing capacity challenges, the effect of the small decline in activity evident in the December quarter figures may be having a minimal impact at worksites so far.

The inflation adjusted $9.15 billion of new work commenced in the December quarter was still up a healthy 6.7% compared to the same period of 2021, so the industry is not exactly sitting around twiddling its thumbs.

This story was originally published on Interest.co.nz and has been republished here with permission.