Residential building consents were up 2.6 percent in September. Photo: 123RF
An economist says building consents are on the rise as interest rates fall and the housing market stabilises but it will take time for demand for new builds to return.
Westpac data shows residential consents ticked up 2.6 percent in September and levels have flattened out this year following big declines in previous years.
Senior economist Satish Ranchod said it signalled the downturn in the construction sector was approaching its end.
He said he expected to see a true turn-around in 2025.
"There is still a pretty soft outlook for new construction, interest rates are still relatively high, buyers are a little bit cautious about committing to a new development. But as we look to the year ahead, interest rates continuing to drop and an eventual pick up in the housing market will be supportive for new interest from buyers and developers.
"It will take a while to come through but I think as we go into 2025, we will start to see some of the weakness we're seeing in construction starting to turn around."
Ranchod said if house prices and construction costs dropped next year as a result of easing interest rates and inflation it would be good news for new builds.
He said non-residential construction was still facing challenges.
"Soft business activity is weighing on the amount of new work that comes to market, but we are seeing some strength in some areas like office redevelopment."