RMBF says downturn prediction has come to fruition

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The Registered Master Builders Federation says the figures released recently by Statistics New Zealand confirm that the building sector is in danger of slipping back into a recessionary state.

Figures show the number of new housing units fell by 8.9% in August (excluding apartments) — the fourth month in a row of decreases.
RMBF chief executive Warwick Quinn says that small gains the residential building sector experienced earlier in the year are now well and truly reversed, and the present downward trend that Registered Master Builders predicted is unfortunately well entrenched.

Mr Quinn says “while residential construction is continuing to fall, the non-residential sector is also declining, and this is expected to continue for some time.
“The sector will undoubtedly experience increased activity from remedial work relating to the Canterbury earthquake, but this activity is a result of a one-off event, and does not reflect the poor state of the industry.”

Extremely weak

Mr Quinn says Registered Master Builders noticed an immediate drop off in public enquiry once proposed changes to the tax announcements were made earlier in the year and, while April showed growth, the statistics over recent months reflect the extremely weak state of the economy.

Increased costs such as GST, higher interest rates, the impacts of the emissions trading scheme, changes to property tax, higher wood and steel prices and a struggling wider housing market have combined to deter consumers from building new homes.
It is too early to tell if the reduction in income tax will have any positive affect.

Mr Quinn says non-residential construction held up during the recession, with investment in public infrastructure such as sports stadiums, airports and the like, but that projects of this type are now coming to completion.
While there are a few large major commercial consents in the system, the sub-$25 million market appears to be reasonably robust at present.

Mr Quinn believes that until the recovery is well entrenched, investors are confident with tenant demand, and finance is available, this sector will remain flat for some time.
The region with the largest increase in new housing in August was Auckland, with Canterbury and Waikato experiencing the largest decreases in the sector.