New Zealand house building activity grew at its fastest pace in almost 12 years in the first quarter as construction ramped up to rebuild the country's second-biggest city and fill a housing shortage in Auckland.
The volume of residential building work put in place grew a seasonally adjusted 15 per cent in the three months ended March 31, the biggest quarterly increase since September 2002, and accelerating from a 2.3 per cent rise in the December quarter, according to Statistics New Zealand.
The value of residential building work grew 17 per cent to $2.36 billion in the period, its eighth quarterly gain.
The volume of non-residential work grew 17 per cent in the first three months of the year, from a fall of two per cent in the December quarter, and the value climbed 18 per cent to $1.4b.
“It’s definitely stronger than what we had in mind,” said Christina Leung, economist at ASB Bank in Auckland.
“Our expectations were for a modest increase in construction activity that reflected the fact everything’s tracking up.”
The tick up in actual building activity coincides with growing issuance of new consents with the country’s two biggest cities, Auckland and Christchurch, driving work due to their respective housing shortages.
Local authorities issued residential building consents worth $2.29b and non-residential permits worth $1.19b in the March quarter.
Construction activity is seen as a major driver for economic growth in the coming year, and the Reserve Bank is closely watching whether inflation pressures are growing from the Canterbury and Auckland building programmes.
Mr Leung said Wednesday’s data is unlikely to prompt the Reserve Bank to ramp up its tightening of monetary policy because inbound migration is adding to the supply of workers and alleviating some of the labour costs associated with the Canterbury rebuild.