Building report notes three curbs for demand

An immigration downturn, Australia’s fortunes recovering with more Kiwis being drawn across the Ditch or a decline in tourism numbers are events that could reduce demand for new construction, says a new report.

Rider Levett Bucknall’s trends in property and construction report for this year’s second quarter names these three factors as threats to the demand for new building.

“Three things, [alone or combined], would need to happen to reverse the current long-term drivers of building activity,” the company’s report says. “The first would be a large reduction in visas issued by the Government for permanent and long-term migrants.

“Second would be an unexpected upswing in the Australia economy, enticing Kiwis back over the Ditch. Our forecasts of trade-partner growth do not see this as likely.

“Finally, tourism numbers would have to fall from their historic highs. Again, the underlying drivers of growth — bigger, more fuel-efficient planes, rising middle classes in Asia and New Zealand’s comparative safety as a tourism destination — are all pointing to continued growth.”

This week Labour leader Andrew Little said Auckland building costs rose 17 per cent in the past year compared to only 7 per cent nationally.

Using Statistics NZ data, Little said Auckland building consent costs rose from $1846/sq m in the year to March 2016 to $2153/sq m in the latest March year. That compared to $1812/sq m to $1946/sq m nationally.

“Clearly, the Auckland building industry is struggling to get the workers to keep up with demand,” Little said.