The demand for construction work will continue to grow for the next 2 years to peak in 2021. However, residential activity will start easing off in 2020, ahead of non-residential building.
THE RECENT National Construction Pipeline Report 2019 provides updated projections of national building and construction activity for the next 6 years through to December 2024.
Key findings from report
BRANZ and Pacifecon NZ compiled the report for MBIE to provide an update on residential building, non-residential building and infrastructure activity. BRANZ forecasts anticipated activity in the pipeline, and Pacifecon researches known projects.
The key findings of the report:
- Construction activity growth is forecast to continue through to 2021 (Figure 1).
- Residential building activity in Auckland is forecast to continue to grow.
- Non-residential building activity is forecast to peak in 2021.
- Infrastructure activity is forecast to overtake non-residential activity by 2023.
Construction activity peak in 2021
Growth in construction activity has been driven by the strong increase in residential consenting levels over the past few years. However, residential activity is forecast to level out from 2020 onwards, as well as non-residential activity tailing off in 2021, leading to a peak in construction activity in 2021.
Residential buildings are the largest contributor to national construction, contributing 58% of the total construction value in 2018.
Residential growth continues in Auckland
Despite a levelling out in residential activity nationally, Auckland is expected to continue growing throughout the forecast period. Residential activity in Auckland is expected to increase by 37% above 2018 levels by 2024.
Multi-unit dwellings accounted for 36% of all dwellings nationally in 2018. This is forecast to increase to 41% by 2024 with 224,500 dwellings over the 6 years – an average of over 37,000 per year.
Dwelling units consented in Auckland grew by 18% in 2018, exceeding the previous peak in 2002 by 6%. Dwelling consents will increase in Auckland by 33% from current levels to a high of over 17,000 in 2023, resulting in over 96,000 dwelling units consented in the forecast period – almost 43% of the national total (Figure 2).
Non-residential activity to peak in 2021
Non-residential activity is forecast to increase by 3.7% between 2018 and 2021. However, activity is forecast to fall, down by 20% from the 2021 peak by the end of the period. This is because activity in Auckland will tail off after 2021.
Commercial buildings dominate non-residential building work expected to start in 2019, contributing 48% of the total number of projects and 59% of the total value of projects.
Infrastructure activity has not exceeded non-residential activity since 2013. However, it is forecast to show sustained growth over the forecast period and will overtake non-residential activity by 2023.
The National Construction Pipeline Report 2019 is available at www.mbie.govt.nz.
Articles are correct at the time of publication but may have since become outdated.