A new report from Westpac shows tough times ahead for the building industry.

The figures show construction demand will fall due to cheaper house prices and rising interest rates.

The slowdown has already started in the North Island, where new stats show a decline in building consents being issued

Naylor Love Chief Executive Rick Herd told Mike Hosking Westpac might have even been a little optimistic.

He says there's a drop back in supply requirements from the residential sector, as well as tradespeople from the sector looking for work.

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