13 Aug 2014

Profits down amid building boom

12:36 pm on 13 August 2014

A report on the state of the economy in Christchurch shows that while the local GDP is on the rise, businesses' profits are down.

It also shows house prices have dropped slighly, rents are sky rocketing, and almost a billion dollars of construction is under way.

The ReStart container mall in Christchurch.

Photo: RNZ / Diego Opatowski

The quarterly economic report, published by the Canterbury Development Corporation, shows GDP in the city increased by 6.1 percent in the past year with the construction sector experiencing the biggest growth, at 15.4 percent.

Commodity exports out of the Lyttleton Port and Christchurch Airport in May were made up of $295 million of dairy produce, $79 million of meat and $56 million of machinery.

But the profitability of South Island businesses is showing a downward trend with 12 percent of firms reporting business has fallen.The report says firms are also less optimistic about the coming business quarter, with just 2 percent expecting business to improve, down from 13 percent in the past quarter.

The report puts the the total value of residential and commercial building underway in Canterbury at $915 million.

House prices in the city have dipped from their all time high. In June, the average sale price for a house was $430,000, down from the May high of $436,000. The report says, though, that prices generally appear to be on an upward trend.