6 Dec 2012

Strong growth in house building

9:07 am on 6 December 2012

An economist says the sharp increase in building activity for the September quarter will continue into next year as the construction industry picks up steam.

Official figures show building activity rose 9.6% in the three months to the end of September, the largest quarterly increase for 10 years.

Non-residential building was up 12.4%, while residential building rose 7.1 in the same period.

Westpac economist Michael Gordon says the building industry can sustain further growth.

He says nationwide construction activity is still probably closer to the trough than the peak of the last cycle and there is still capacity overall.

Mr Gordon says construction in Christchurch this year has been mainly repair jobs, but next year there will be an increase in complete rebuilds.

He says that will be a huge draw on the industry's resources and some will have to shift from other parts of the country.

"So I guess the question becomes what does it take to shift people there, what does it take to attract people in terms of wages, how do you accommodate the people once they get there?"

Mr Gordon says the September quarter's strong growth in house building is a sign the construction industry is responding to demand in Auckland.

He says for every one new house in Auckland there was an increase of seven people, so there was clearly a need for more houses to accommodate those people.

Mr Gordon says it's good to see some supply response to Auckland's ongoing housing shortage.