New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Building Sector</h2>
NZ Consents — Shining Light
Residential consents have started 2020 in the same healthy vein we saw through all of 2019, while non-residential saw a firmer month in what appears a modest easing trend. Whilst there is some debate about whether residential can grow given capacity (chiefly) and credit constraints, or if non-residential may pullback, the big picture remains that NZ construction activity should continue at very healthy levels for the foreseeable future.&nbsp;
Construction remains a shining light in the economy
Record low interest rates, high migration, and tight supply of existing homes continue to fuel demand for new houses across the country. 38.5k (annualised) consents in January, -2% mom/+2% yoy, compares to a total of 37.5k through 2019 (the highest level for a calendar year since 1973). The recent ANZ Business Outlook survey reinforces that construction remains a shining light in the economy. Against a backdrop of falling business confidence, the construction sector was upbeat with a net +23% of firms expecting an improvement in residential construction activity over the next 12 months.&nbsp;
Signs non-residential maybe easing, but any pullback likely to be modest&nbsp;
January was a firmer month for non-residential, flat in value and up +19% in floor area consented (sqm). Inherent variability in non-residential consents makes trend spotting difficult. Numbers over the past eight months, flat in value but -9% in sqm, may suggest a softening trend. When coupled with the recent or pending completion of a number of large multi-year projects and increased economic uncertainty, we would not be surprised to see a modest easing in non-residential activity over the next 12–24 months. That said, we continue to expect that any downturn will likely be modest given the healthy pipeline and lagged needs for investment (including government's sizeable health and education investment plans), following strong economic and population growth over a large part of the past decade. The ANZ Business Outlook for commercial construction was equally positive in January, with +26% of firms expecting greater investment in the year ahead (albeit the number can be volatile).
Matt Henry CFA matthew.henry@forsythbarr.co.nz +64 9 368 0115&nbsp;
Ashton Olds ashton.olds@forsythbarr.co.nz +64 9 368 0127

Building Sector
NZ Consents — Shining Light
Residential consents have started 2020 in the same healthy vein we saw through all of 2019, while non-residential saw a firmer month in what appears a modest easing trend. Whilst there is some debate about whether residential can grow given capacity (chiefly) and credit constraints, or if non-residential may pullback, the big picture remains that NZ construction activity should continue at very healthy levels for the foreseeable future.&nbsp;
Construction remains a shining light in the economy
Record low interest rates, high migration, and tight supply of existing homes continue to fuel demand for new houses across the country. 38.5k (annualised) consents in January, -2% mom/+2% yoy, compares to a total of 37.5k through 2019 (the highest level for a calendar year since 1973). The recent ANZ Business Outlook survey reinforces that construction remains a shining light in the economy. Against a backdrop of falling business confidence, the construction sector was upbeat with a net +23% of firms expecting an improvement in residential construction activity over the next 12 months.&nbsp;
Signs non-residential maybe easing, but any pullback likely to be modest&nbsp;
January was a firmer month for non-residential, flat in value and up +19% in floor area consented (sqm). Inherent variability in non-residential consents makes trend spotting difficult. Numbers over the past eight months, flat in value but -9% in sqm, may suggest a softening trend. When coupled with the recent or pending completion of a number of large multi-year projects and increased economic uncertainty, we would not be surprised to see a modest easing in non-residential activity over the next 12–24 months. That said, we continue to expect that any downturn will likely be modest given the healthy pipeline and lagged needs for investment (including government's sizeable health and education investment plans), following strong economic and population growth over a large part of the past decade. The ANZ Business Outlook for commercial construction was equally positive in January, with +26% of firms expecting greater investment in the year ahead (albeit the number can be volatile).
Matt Henry CFA matthew.henry@forsythbarr.co.nz +64 9 368 0115&nbsp;
Ashton Olds ashton.olds@forsythbarr.co.nz +64 9 368 0127

Building Sector NZ: Consents — Shining Light

Fletcher Building

Building Sector NZ: Consents — Shining Light