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Construction activity expected to hit $43.5 billion

Hon Jenny Salesa Minister for Building and Construction
3 September 2019 PĀNUI PĀPĀHO MEDIA STATEMENT

The 2019 National Construction Pipeline Report, released today, forecasts that construction activity across the country will continue to remain strong for at least the next five years.

“This year’s report shows that the value of construction activity is expected to hit $43.5 billion at its peak,” says Minister Salesa, Minister for Building and Construction.

“This is great news for the economy and proof that the Government’s policies and work in the construction sector are hitting the mark. Sustainable growth in our construction sector supports jobs and builds the houses, schools and hospitals that are essential to all of our wellbeing.

“This Government promised an economy that is growing and working for all of us, and this report shows we are doing precisely what we promised.

“The report is a projection of national building and construction activity through to 31 December 2024, which helps provide certainty to the construction industry. It also means Government and the sector can work together to support better planning, better scheduling of investment in skills and capital to meet future construction needs, and better coordination of construction procurement to improve scheduling of construction projects.

“It can help moderate the boom-bust cycles that negatively impact productivity, innovation, employment, skill levels and quality in the construction industry.

The report highlights that: • residential building makes up 58 per cent of national construction and is expected to grow to $26.5 billion • consents for residential dwellings are forecast to reach 38,000 a year by 2022. Last year, almost 33,000 residential consents were issued • in Auckland, the value of residential activity is forecast to reach more than $12 billion, which will be a 39 per cent increase on 2018 levels • non-residential building is expected to peak at $9 billion, and infrastructure activity is forecast to increase to $8.3 billion • infrastructure activity is forecast to overtake non-residential activity by 2023.

Minister Salesa says that the Government has introduced a broad-based set of initiatives to support the construction industry and respond to the challenges it faces – for example, planning significant reforms to the Building Act, leading the Construction Skills Action Plan, setting up the independent New Zealand Infrastructure Commission Te Waihanga to ensure New Zealand gets the quality infrastructure investment needed to improve our long-term economic performance and social wellbeing, and working with the sector to establish the Construction Sector Accord.

Other highlights from the report In Auckland, over 96,000 residential dwellings are expected to be consented from now until 2024. It’s forecast that 58 percent of consents will be for multi-unit dwellings (apartments, townhouses, retirement village units).

Wellington experienced strong growth (15 per cent) in residential building and nearly 19,000 dwellings are expected to be consented from now until 2024. Over 40 per cent of these are forecast to be multi-unit dwellings. Non-residential building and infrastructure spend is expected to remain strong, with a focus on building and repair work from the Kaikoura earthquake, water, hospital and civic developments and public transport.

Canterbury is bucking the growth trend, with total construction value reducing by 9 per cent in 2018 to $6.6 billion. And while residential building is forecast to maintain its current levels for the next two years, it is expected to drop from 2022, reaching $1.2 billion by 2024.

Outside the metropolitan centres, total construction grew to $7.7 billion in 2018 and is expected to grow to $8.4 billion over the next two years, mostly from residential building.

Detached dwellings (standalone houses) are currently the most common type of new dwelling in New Zealand. Townhouses are the next most common, and since 2005 have been consented in higher numbers than apartments. Apartments are typically the densest form of dwelling type. Consents are nearing the levels of the apartment boom in the early-to-mid 2000s but have not grown to quite the same extent as townhouses over the past few years.

The report can be found here: https://www.mbie.govt.nz/building-and-energy/building/supporting-a-skilled-and-productive-workforce/national-construction-pipeline-report/ The report is based on building and construction forecasting by the Building Research Association of New Zealand (BRANZ) and Pacifecon NZ Ltd data on researched non-residential building and infrastructure intentions. It is funded by the Ministry of Business, Innovation and Employment.

ENDS


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