Report forecasts ‘unprecedented’ construction activity   29 Jul 2015

Nick Smith

29 JULY, 2015

Report forecasts ‘unprecedented’ construction activity

The total value of building and construction activity in New Zealand is forecast to top $200 billion over the next six years and peak at an all-time high of approximately $37 billion in 2016 according to the latest National Construction Pipeline Report released today by Building and Housing Minister Dr Nick Smith.

“This report forecasts the strongest sustained level of growth in the building and construction industry in 40 years. It confirms we are building more than we have ever before, and forecasts further growth of 12 per cent per year for each of the next two years. The projected peak in 2016 and 2017 is 30 per cent higher in real terms than the last peak in 2007, and 85 per cent higher than the peak in 1997,” Dr Smith says.

The National Construction Pipeline provides national and regional forecasts of activity for residential and non-residential building and construction. It was developed following the recommendation of the Building and Construction Sector Productivity Taskforce for the publication of a forward-looking programme of sector activity to enable better planning and investment. The report is commissioned by the Ministry of Business, Innovation and Employment, and is jointly prepared by BRANZ and Pacifecon New Zealand Limited.

“I am particularly encouraged by this report’s projections that 80,000 new homes will be built in Auckland for the forecast period of six years to the end of 2020. This compares to only 30,000 built over the past six years and signals a massive building boom. It indicates that the measures by the Government and Auckland Council to increase supply are working,” Dr Smith says.

“This report is significantly more optimistic about the future rate of homes being built in Auckland compared to last year’s report. The 2014 report projected 52,500 new homes over the years 2015 to 2019, whereas this report projects 67,700 over the same period. The projected value of residential construction in Auckland similarly increased by 26 per cent over the same five years, from $34 billion to $43 billion.

“The report also identifies three significant trends. Firstly, a shift in the pattern of growth in residential construction activity between Auckland and Christchurch. The house consents in Canterbury are plateauing now and forecast to drop from 7750 in 2015 to 3000 by 2020, while Auckland continues to increase from 10,500 in 2015 to around 14,000 between 2016 and 2020.

“The second trend is a shift to more apartments and attached homes with these making up 33 per cent of new builds over the next five years, as compared to 16 per cent over the past five years.

“The third trend is a shift to smaller new homes. The average home size increased by 38 square metres – up 28 per cent – in the 1990s, and by another 26 square metres – up 15 per cent – in the 2000s, but has been in decline since 2010 and is expected to fall by 28 square metres, or 14 per cent, this decade.

“Today’s report points to a golden era for New Zealand’s building and construction industry. The challenge for Government is to ensure we have the skills and capacity to meet the demands of this growth, and that the regulatory measures are in place so that quality is not compromised for quantity during this period of unprecedented growth.”

The latest National Construction Pipeline report is available at:www.building.govt.nz/building-value-productivity-partnership#national-pipeline.

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