Building value at its strongest in recent years
Corelogic’s Property Market and Economic Update report1 for the first quarter of 2019 echoed much of what was seen in 2018 – low sales volumes but consistent value growth.
Dunedin and Wellington posted the most positive property value growth, increasing 13.3% and 8.4% respectively over the past 12 months. Tauranga and Hamilton also recorded rising prices, but at a slower rate than Dunedin and Wellington.
While the lower building consent numbers and slowing growth of Auckland property values continues to draw attention, data from Stats NZ’s most recent quarterly ‘Value of Building Work put in Place’ report2 shows building activity is booming in the city of sails, driving New Zealand’s building work value to its highest since 2016.
Across the country, building activity increased a seasonally adjusted 6.2% in the March 2019 quarter when compared to the December 2018 quarter.
Non-residential building activity increased 9% in the March quarter, while residential construction went up 4.3%.
Recent growth also reflected increases in paid hours for the construction industry, as shown in the latest quarterly employment survey data.
Auckland and Waikato driving value
According to Stats NZ2, the actual value of total building work was $6.1bn for the March 2019 quarter — up 16% from the March 2018 quarter.
By region, the actual value of total building work in the March 2019 quarter (compared with the March 2018 quarter) was:
• $2.5 billion in Auckland – up 26%
• $595 million in Waikato – up 30%
• $474 million in Wellington – up 2%
• $950 million in the rest of North Island – up 13%
• $931 million in Canterbury – down 1%
• $618 million in the rest of South Island – up 12%
Residential and non-residential boosts
In the year ended March 2019, Stats NZ latest report2 found the national value of residential building work increased $1.1bn (8%) compared to March the previous year, while the national value of non-residential building work increased $923m (12%). Both were driven by strong performances in Auckland during the period.
The non-residential building types that recorded the most growth in the year ended March 2019, compared with the March 2018 year, were:
• shops, restaurants, and bars — up $337m (up 41%)
• hotels, motels, boarding houses, and prisons — up $248m (up 40%)
• storage buildings — up $199m (up 26%)
The statistics above paint a comfortable picture for homeowners, specifically for those over 65 years old, many of whom have seen their homes appreciate significantly over the past decade. As superannuation fails to meet the requirements of what most would consider a ‘no frills’ retirement, the value in people’s homes provides an option for a more relaxed retired lifestyle.