NZ: Strong housing data – ANZ

Analysts at ANZ note that the New Zealand’s volume of building work put in place rose 6.2% q/q in Q1 to be up a solid 11.4% over the year.

Key Quotes

“Q1’s rise was above our expectation for a 1.8% rise and market expectations for a 1.1% q/q increase. Nominal activity increased 7.2% q/q (15.9% y/y). By region, there was a strong surge in non-residential work in Auckland. Growth in building activity was broad-based across New Zealand, but smaller increases were seen in Wellington and Canterbury.”

“Over the quarter, the increase in volumes was driven by strong non-residential work, which was up 9.0% q/q, following a solid 5.7% rise last quarter. This was well above our expectations for a 1.7% rise. While non-residential building activity is lumpy, the recent increases see volumes up an impressive 17% over the year.”

“Residential work was also solid, increasing 4.3% q/q to be up 7.8% over the past year. This was also stronger than the 1.7% rise we expected.”

“Taking together with some weaker indicators earlier in the quarter, the strength in construction suggests balanced risk around our provisional Q1 GDP estimate of 0.5% q/q, but we still have important data to come before we confirm that pick.”