The construction industry's main annual forecast has switched to seeing an overall fall of $9 billion per year in activity by 2027, completely driven by an $11 billion fall in residential construction, thanks to higher interest rates and a collapse in confidence because of falling house prices.
BRANZ and Pacifecon have published their 10th annual National Construction Pipeline Report, which showed they expect house building work to slump by more than a third, or $11b, to $19.6b per year over the next five years as 16,000 fewer consents in Auckland are now expected.
“We forecast that Auckland reached its peak in dwelling consent activity in 2021. The forecast is for a slight decline in the number of consents in 2022 before falling to 13,730 at the end of the forecast period," BRANZ and Pacifecon said in the report.
"Just under 95,000 dwelling units are expected to be consented in the six years from 2022 to 2027 (111,000 were anticipated over six years in the 2021 report and 73,000 in the 2020 report),” they said.
The report forecast total construction activity would fall steadily from a peak of $50.9b in 2021 to $41.7b in 2027, meaning the fall is completely driven by the house-building sector.
Auckland is the main driver, with consents falling from 20,529 in 2021 to a low of 13,680 in 2026.
“2021 can be characterised as the year of recovery after the lockdowns of 2020. Activity in the residential sector was strong, buoyed by high levels of consenting and work that was planned to be completed in 2020. However, the impact of material and labour constraints can be seen across the regions as activity has plateaued throughout 2021," the BRANZ and Pacifecon Report said.
16 Comments
I guess that means that the price of building mats and asscoiated labour costs should fall accordingly.
It was late y'day when I posted about the China oversupply of housing. You would think there's plenty of building mats and labout going for a song soon.
Fifty million empty flats threaten to plunge China’s troubled property market further into crisis, warns think tank
https://www.scmp.com/business/china-business/article/3188781/fifty-mill…
Much of this construction boom was fueled by unsustainably high house prices anyways.
New developments over the last 3 or so years can best be described as if homebuilders were playing a game of Tetris trying to pack as many overpriced shoeboxes in the tightest space.
A colleague paid nearly a million for a 3-bdr townhouse in Karori (WLG) with no car park and open space. This house shares land with 16 other sardines perched on a steep street with sharp bends and no available on-street parking. To get home from the nearest dairy or bus stop, you'd have to walk uphill for 12-15 mins, depending on individual lung capacity, and the last ~400m is a narrow, bendy stretch has no footpath and barely enough room to drive.
Hopefully, the likes of Simplicity, councils and KO take over the excess capacity and ramp up social housing/build-to-rent construction.
Still quite a lot of development out my way. I drive past this one every day https://universalhomes.co.nz/communities/west-hills/ I think the more established players will be fine. Happy to see any improvement in the quality of NZ housing stock
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