Construction has varied across different sectors in the latest data collected from Infometrics, especially residential.
The volume of total building work put in place was unchanged in the March 2025 quarter from December 2024, following six consecutive quarterly declines. Lower non-residential activity (down 3.9 percent) was offset by a 2.6 percent rise in residential activity (all figures seasonally adjusted).
Total building activity in the March quarter was 12 percent lower than a year earlier, declining for the seventh consecutive quarter in real terms. The annual decline was smaller than the 16 percent fall in the previous quarter, but it is still the second largest drop since September 2011 (excluding the lockdown-affected June 2020 quarter).
Residential activity rose from the previous quarter for the first time in over two years, but despite the 2.6 percent lift, work put in place volumes in the March quarter were 25 percent below the peak in September 2023 (seasonally adjusted). The annual decline in residential activity narrowed to 12 percent pa, the smallest annual fall since March 2024.
Non-residential activity declines accelerated as expected, as this build type tends to lag the economic cycle. The annual decline of 12 percent pa was the largest since December 2011 (excluding the June 2020 quarter). Annual growth in non-residential activity has been negative for a full year, for the first time since 2020.
Residential construction activity was stronger than expected in the March quarter, with activity 2.2 percent above our forecast. It was positive to see the first quarterly rise in residential activity since September 2022. Part of the overperformance in March could be due to timing, with a 3.2 percent downward revision to new dwelling activity in December 2024 pushing more work into the March quarter.
New dwelling activity was weaker than expected, 1.3 percent below forecast, recording the lowest quarterly value of activity in four years. Residential additions and alterations (A&A) work continued to moderate, but was the main driver of the overperformance, NZD 150m higher than expected. Quarterly residential A&A work was at its lowest in two years, but it remained a larger proportion (14 percent) of total residential activity than during the new construction boom in 2022 (12 percent).
Non-residential activity also overperformed, with activity 5.9 percent above forecast. Overperformance was driven largely by social building (NZD 150m higher than expected), and factories and education building were also NZD 42m and NZD 37m higher than expected respectively. In contrast, storage buildings were NZD 94m lower than expected.
All broad regions saw an annual decline in residential activity, led by Wellington (-31 percent pa). Non-residential weakness was widespread but uneven, with annual declines occurring across the broad regions except for Canterbury (up 6.1 percent pa). There was less than NZD 1.0b of non-residential activity in Auckland (down 22 percent pa) for the first time since the March 2022 quarter. The second-largest decline was in the South Island (excluding Canterbury), which was down 9.5 percent pa. Waikato (-4.4 percent pa), Wellington (-2.7 percent pa), and the Rest of the North Island (-1.0 percent pa) saw more muted declines.
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