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The house building sector is expected to pick up in the March quarter of next year, according to industry research and analysis company BIS Shrapnel.
A weak rebound in dwelling approval numbers is expected during this period, followed by a strong rebound in 2010/11 and 2011/12, and driven by a range of factors.
Those factors included strengthening economic growth, low interest rates, improving home affordability, pent-up housing demand, higher net overseas migration levels and an expanding housing stock deficiency.
The strong rebound would be followed by a stabilising period during the two years to 2013/14.
For the year to March 2009, BIS Shrapnel senior project manager Adeline Wong expects the building sector, including both residential and non-residential activity, to contract by almost 20%.
"The sharp downturn is largely attributed to a record low number of dwelling approvals, which are expected to contract by over 30% to just above 17,000 units for 2008/09," she says.
Wong says the dwelling sector will be instrumental in driving the next building sector upturn expected from 2010/11 onwards.
"The reliance on the dwelling sector is because of weak non-residential building activity due to a drop-off in social and cultural building activity, and subdued activity in retail, office, storage and factory building," she says.
"The drop-off in these sectors is due to falling demand and lack of project finance, which combined, will cause projects to be delayed, deferred or shelved."
But in the short term the commercial sector would hold up for at least another year, as commercial projects more advanced in their construction stages would be completed.
The civil engineering sector would also provide a buffer to the construction sector, she said.
Increased spending on infrastructure of $5.8 billion during the next five years would see the civil engineering sector expand by more than 10% a year during the two years to 2010/11.
Wong says the extra spending will enable the completion of projects under construction and also fast track new projects.
"The civil engineering sector will also be underpinned by the energy sector and projects such as Meridian's billion-dollar development of five wind farms and Contact Energy's Waitahora wind farm," she says.
BIS Shrapnel believes the Auckland region will suffer a substantial housing stock deficiency during the next five years as a result of under building.
Dwelling approvals for the Auckland region peaked in 2003 at 12,500 units, and had been falling ever since, with record lows of below 4,000 units expected to be reached in 2008/09.
Auckland had the lowest home affordability due to high median house prices, so significant pent-up demand for houses was also expected to have built up in the region during the past few years.
