Supply pressures drive building boom
New Zealand’s construction industry is booming – thanks to supply pressures in Auckland and Canterbury.
Thursday, March 5th 2015, 12:00AM
by The Landlord
Over $15 billion worth of building work took place in 2014, according to Statistics New Zealand. This was a 23% rise in value on 2013.
But Statistics NZ business indicators manager Neil Kelly said that Auckland and Canterbury accounted for $9.7 billion of that work. This equates to nearly two-thirds of the national total.
Residential building activity dominated the work. It recorded growth of 4.3% nationwide over the December quarter.
Westpac senior economist Michael Gordon said the data capped off a year of very strong growth for the industry.
Building work over 2014 as a whole was up 17% on the previous year, which is the strongest annual pace of growth in nearly 15 years.
Gordon said the growth was dominated by the Auckland and Canterbury regions, with construction up by 9% in both regions.
This was to be expected given the relative pressures on the housing stock across regions, he said.
“Indeed, despite the level of homebuilding in Auckland reaching a seven year high, it has continued to lag behind demand.”
Construction has been the biggest single contributor to GDP growth over the last couple of years – and Gordon said Westpac expects it to remain a significant driver of GDP growth over the next two years.
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