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Uncertain outlook for property, construction: RLB

According to Rider Levett Bucknall’s Forecast 102 report – New Zealand Trends in Property and Construction – the outlook for the property and construction sectors is uncertain.

Prepared by the New Zealand Institute of Economic Research (NZIER) for Rider Levett Bucknall (RLB), Forecast 102 found higher cost pressures and interest rates are leading businesses to be more cautious about investment.

RLB director Grant Watkins said: ‘‘Nonetheless, with immigration and international border restrictions easing, RLB expects population growth from a gradual recovery in net migration inflows from next year will support underlying demand for non-residential and infrastructure construction demand over the longer term.’’

According to the report, there was further growth in construction in the March quarter, continuing the recovery in activity since lockdown restrictions were relaxed in December.

While demand was strong, there remained challenges for the construction sector as Covid-19 infections accelerated over the first half of the year.

Building sector firms grappled with staff shortages as workers stayed home either as a result of infection or self-isolation.

This setback exacerbated the shortages from the difficulties firms faced in hiring workers given international border restrictions.

More than 60 per cent of construction firms surveyed in the June NZIER Quarterly Survey of Business Opinion reported finding labour as the primary constraint on their business.

Against these supply-side challenges, demand for construction had been solid. Dwelling consent issuance points to a continued solid pipeline of residential construction work over the next year, Watkins said.

Residential construction demand in Auckland has been particularly strong, with annual dwelling consents issued in the region totalling over 21,500 for the year to June 2022.

There was also growth in dwelling consent issuance in other regions, including Wellington and Canterbury, he said.

While there looks to have been a flattening out in dwelling consent issuance in more recent months, the high level of issuance should support strong residential construction activity for the coming year, he said.

‘‘Growth in residential construction demand has been driven by the continued intensification of housing, with a continued surge in consent issuance for medium-density housing such as townhouses and flats.

‘‘In contrast, demand for the construction of standalone houses has declined in recent months, although it still remains the most popular type of residential construction.

‘‘We expect increased population density to continue driving housing intensification over the coming years,’’ Watkins said.

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2022-10-01T07:00:00.0000000Z

2022-10-01T07:00:00.0000000Z

https://fairfaxmedia.pressreader.com/article/282544432185115

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