31 Oct 2023

'Very sharp' construction downturn likely, as residential consents slump

4:33 pm on 31 October 2023
Construction site.

File photo Photo: 123rf.com

The construction sector is headed for a sharp downturn as the number of residential building consents continues to fall.

Stats NZ said the number issued in September fell a seasonally adjusted 4.7 percent, following a 7 percent drop in August, and the number issued for the year ended September was 40,400, 20 percent lower than the previous year.

Westpac senior economist Satish Ranchhod said the downturn in the building sector was deepening, and he was expecting a sharp decline in activity over the year ahead.

"We think building consents have got a bit further to fall from here," Ranchhod said. "If I think about the actual amount of construction activity, we're looking at a downturn that's probably going to be in the ballpark of about 16 percent.

"That's a very sharp downturn. In fact, the last time we saw something getting that sharp was during the global financial crisis where things fell by about 30 percent."

Satish Ranchhod said the slowing activity would have an impact on staffing decisions at construction firms.

Credit bureau Centrix reported a sharp rise in the number of construction companies under stress, with more going into liquidation.

Construction firms filing for liquidation were up 57 percent year-on-year as credit defaults climbed.

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