RMBF says construction in recession — again


The Registered Master Builders Federation says while consent figures for new dwellings showed an increase for the 2010 year compared to the 2009 year, the current trend is one of decline.
The year ending figures released recently by Statistics New Zealand confirm that the number of consents issued for new dwellings (excluding apartments) in 2010 rose by 13% on 2009.

RMBF chief executive Warwick Quinn says while the annualised figures are better than 2009, this is still the second lowest annual total for a calendar year since the series began in 1990.
The small gains the residential building sector experienced earlier in 2010 have virtually been wiped out, with the December 2010 figures being the sixth consecutive month of decline.
“While 2010 was slightly better than 2009, the continuous downward trend for new residential building consents is one of concern, particularly when the value of non-residential consents for 2010 is down 17% on 2009,” Mr Quinn says.

Negative cost-related announcements
“As much as the Canterbury rebuild work and the Government’s weathertightness funding package should provide some relief, this work is not reflective of the poor state of the sector and the fragile state of the economy.”

Since March 2010, all cost-related announcements that influence construction have been negative. Increased costs such as GST, higher interest rates, the impacts of the emissions trading scheme, changes to property tax, higher wood, concrete and steel prices, and a struggling wider housing market have combined to deter consumers from building new homes.
It is estimated that New Zealand needs to be building approximately 20,000 to 25,000 new homes each year to maintain the nation’s housing stock and capability. 

Sector will remain flat
“We built 14,663 new homes in 2010 and fewer than 13,000 in 2009. These low figures will result in the sector losing capability, and it will struggle to cope should a rebound occur,” Mr Quinn says.

The RMBF believes that until the recovery is well entrenched, and investors and consumers are confident with the stability of the wider economy, the sector will remain flat for some time.