New home construction is expected to rise slower than previously predicted, according to the Ministry of Business, Innovation and Employment (MBIE)’s latest pipeline report.
The forecast released in 2017 predicted that construction activity would peak at $42 billion by 2020, however the latest report has lowered the forecast, pushing the timeframe back to 2022 to reach the $42 billion threshold.
Utilising statistics from building research agency BRANZ and building sector intelligence firm Pacificecon, MBIE now expects that it will take until 2022 for construction sector activity to reach $40 billion, with $41 billion predicted for 2023.
It also predicts that 22,000 building consents for new homes will be issues between 2018 and 2023, peaking at 43,000 by the end of that timeframe.
According to Housing Minister Jenny Salesa, the report indicates steady and sustained construction sector growth rather than a cycle of peaks and falls.
“New Zealand’s traditional construction boom-bust cycles have undermined the certainty and confidence needed to grow skills and sustain a robust workforce over time,” said Salesa. “Gains in peak periods dissipate and the effort to gear up again has taken energy that could have been more usefully applied to supporting innovation and efficiencies.
“Greater confidence and certainty within the construction sector will provide a more stable foundation as we embark on the decade-long KiwiBuild project to deliver and additional 100,000 modest starter homes to the market.”
The report also noted that Auckland’s new housing market is undergoing a noticeable change, with building consents for apartments and other multi-unit dwellings overtaking consents for standalone houses over the last year. 51% of all homes consented in Auckland in 2017 were multi-unit dwellings – a tipping point that had not been expected to occur until 2022 – and the report forecasts that 60% of all new Auckland dwelling consents will be for multi-unit developments by 2023.
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