This decline in residential construction activity reflects broader challenges facing the housing sector and the economy as a whole. According to Statistics NZ, only 36,276 new dwellings received consent during this period, marking a notable decrease of 24.8% compared to the preceding year and 27.2% compared to the year ending February 2022.
The downturn in construction activity was widespread, affecting all types of dwellings. Particularly steep declines were observed in apartments and retirement village units, with consent for these housing types plummeting by 49.2% and 45.3%, respectively. Townhouses and home units also saw a significant drop of 16.9%, while stand-alone houses experienced a decline of 24.0%.
The repercussions of this downturn extended to the financial realm, with the total value of new dwelling work consented to witnessing a notable decrease. The value fell from $19.93 billion in the year ending February 2023 to $16.22 billion in the year ending February 2024, representing a substantial decline of 18.6%.
However, amidst the overall decline in residential construction, there was a glimmer of positivity in the form of structural alterations to existing dwellings. Despite the challenging market conditions, structural alterations managed to maintain marginal growth, with $2.494 billion worth of alterations consented. This represents a modest increase of $18 million (0.7%) compared to the previous 12 months.
When considering both residential and non-residential construction, the total value of construction work consented in the year to February amounted to $18.714 billion. However, this figure still indicates a significant drop of $3.69 billion (16.5%) compared to the previous 12 months.
This marked a 3% increase compared to the previous 12 months. However, this increase may mask underlying weaknesses, as the total floor area of non-residential work consented experienced an 8.1% decline. This suggests a potential decrease in actual construction activity, mitigated by inflation.
The challenges in both residential and non-residential construction underscore the broader economic impacts of the downturn in building activity. While non-residential construction has shown some resilience, concerns remain about the sustainability of construction activity amid ongoing uncertainties in the market. Policymakers and industry stakeholders will need to closely monitor these trends and implement targeted strategies to support recovery and sustainable growth in the construction sector.
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