Construction industry hits record high

The last year and a half has been anything but predictable. The pandemic has shaken the snowglobe of normalcy, upending expectations and forgoing forecasts at every turn. Each country has seen specific trends take shape within their own “new normal”, and New Zealand is no different. But because our island nation has fared better than most throughout COVID-19, our collective reaction hasn’t been one of compromise, but of proactivity – specifically when it came to building and renovating homes.

Considerable consents

2020 marked a record number of consents issued for new houses. As of the end of March, 41,028 were issued within a calendar year – according to the latest figures from Stats NZ – topping the previously held 1974 record of 40,025. In fact, in March alone, 4,128 homes were consented. Michael Heslop, Stats NZ’s construction statistics manager, said that within the decade, annual consents have gone from historic lows to all-time highs, and noted a recent increase in consents for townhouses and high-density homes. And according to Auckland Mayor Phil Goff, Auckland has seen over 1,600 new housing consents in April, which is a 40% increase on the previous record set in 2018.

But this activity isn’t limited to new builds – renovations are also on the rise. According to a homeowner survey conducted by Stonewood Homes last year, 46% of respondents claimed that they wanted to upgrade something in their houses. And this has since translated into action – Angela Mentis, BNZ’s chief executive, has seen customer investment in renovations soar by 20% in the last year.

The lockdown effect

New homes and renovations have likely been driven by factors stemming from the pandemic. Working from home is now common practice across what were once fully office-based roles. Kiwis no longer want to be sequestered into kitchens or chilly garages, nor are they keen on sharing open-plan offices across dining room tables with kids and partners. New designs trends tend to focus on comfortable spaces – and plenty of them, hence the uptick in townhouse consents.

The government’s new property laws and incentives may have also supported the rise in new builds, although Andrew Beattie, Infometrics economist, said that it’s too early to make any conclusions about their effect on residential consents.

Construction goes into overdrive

As expected, all this action has resulted in a booming construction industry. Stats NZ’s Michael Heslop stated that “the construction industry continued to be busy in the March 2021 quarter, driven by historically high volumes of residential work”. In fact, the total value of this quarter’s work was around $6.7 billion. Builders are swamped with projects, with some booked up all the way into 2022 – a sign that this boom isn’t ready to slow down yet.

The biggest challenge the construction industry faces now is supply chain issues for building materials and potential labour shortages. However, Westpac senior economist, Satish Ranchhod, said that while these factors may slow the pace in the short-term, the long-term still looked optimistic, thanks to the housing boom and a strong pipeline of infrastructure projects. Westpac’s acting chief economist, Michael Gordon, also noted that “the strength in homebuilding is likely to continue over the next year, given the size of the existing pipeline of work”.

Despite the rest of the world being slowed to a stop, New Zealand has found a way to keep driving industry forwards. 

For more insights check out Golstruct’s blog or reach out to our expert team to invest in a new home.