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Early Signs of Upswing in Residential Building Activity in New Zealand Forming, Westpac Says

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Residential building activity in New Zealand appears to have found a base as early signs of an upswing are forming, Westpac said in a Friday note.

New Zealand's seasonally adjusted total building volume rose 4.8% in the June quarter compared with the March quarter. Residential building volume rose 4.8%, while non-residential volume increased 3.3%.

There are positive signs for the residential building sector, with the number of new homes being consented up 21% year-over-year. The upswing in home building is expected by the back half of the year, extending into 2027.

However, caution is warranted about this upswing, given ongoing softness in the housing market, low population growth, and upward pressure on borrowing costs, the bank added.

While non-residential building activity saw a solid rise, the risks on this front are to the downside. Developers and occupiers are likely to remain cautious about committing to major capital expenditure in the near term due to sluggish economic conditions and ongoing uncertainty about its outlook.

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