Building work flags, especially in housing 

Source: ONE News

The volume of all building work put in place for the three months to December 2008 has fallen by 6.5%, driven by a 13.4% decline in the amount of residential building work.

The last time residential building work hit a similar low was in the March 2002 quarter, according to the latest figures from Statistics New Zealand.

Statistics New Zealand says the volume of residential building work put in place has decreased for the last five quarters, falling by almost one-third over this period.

During this period the rate of decline has also increased.

ASB economist Jane Turner says the decline has not come as a surprise, with residential building consents down.

"House prices continue to fall, reducing incentives to build. In addition, rising unemployment, slowing income growth and weak levels of household confidence will also weigh against housing construction," she says.

The decline was partly offset by a 1.6% increase in non-residential building work, in line with robust figures for non-residential consents.

For the 2008 calendar year, the total unadjusted value of all building work put in place was $12.5 billion, down 7.5% from the previous year.

Residential building work contributed $7.3 billion (down 14.2%), and non-residential building work contributed $5.2 billion (up 3.7%).

Turner expects the housing sector to remain under considerable pressure despite the dramatic drop in interest rates.