Property: The $30b industry
Rapidly growing industry now accounts for 13 per cent of New Zealand’s GDP
Property has directly contributed $29.8 billion to the economy in the 2015-16 financial year, employed 160,800 people and has passed manufacturing to become the country’s largest industry, a study has found.
The industry’s direct contribution accounted for 13 per cent of New Zealand’s gross domestic product (GDP) — ahead of manufacturing’s $25.2b (11 per cent).
The Property Council-commissioned report into the industry’s economic significance showed this came from construction; construction service; property operation; real estate services; science and architectural; technical and engineering services.
Property Council government relations director Matt Paterson said the cost of building materials, the cost of labourers and real estate services all gave back to the economy.
“Property is a really important facilitator and enabler of growth, not just houses, but commercial buildings as well.”
He said the findings were indicative of a busy market and of the economy’s overall health.
“We need to keep building more buildings to match that demand to keep our economy growing.”
The commercial property advocacy group report also showed property had a flow on impact of $53.7b from increased supplier activity and employee spending, bringing its total contribution to $83.5b.
The Urban Economic report, re- leased today, said these figures did not include capital gains from the appreciation of land and property values.
Property Council chief executive Connal Townsend said the findings confirmed “property is the backbone of New Zealand”.
“The property industry impacts all our lives from the buildings we live, work and play in, to the buildings that allow us to teach our children and care for our elderly.”
He said the industry also created prosperity though jobs and a strong economy.
The property industry was the fourth largest employer, with 160,800 people in jobs in March 2016; just behind the health industry’s 214,300 jobs; manufacturing’s 211,800 and the retail trade’s 192,400.
The average earnings in the industry was $60,200 — 7 per cent above the average across all industries of $56,300. The highest earners were those employed in architectural, engineering and technical services — $77,500 per annum.
Construction services accounted for the largest amount of jobs — 76,300 (47 per cent) of all jobs in the industry, followed by architectural, engineering and technical services with 35,400 (22 per cent), then residential building construction with 22,800 (14 per cent).
Auckland Chamber of Commerce chief executive Michael Barnett said the findings were significant and sent a message around the demand for future skills.
“Anything from building through to plumbing, electrical design — there’s going to be a larger demand for the next decade. What I’d like to do is send a message to immigration; this is a very critical sector to the success of any community. That’s one of the biggest issues we have with immigration — we need to be aware of where the demand is.”
Using council data, the researchers also showed New Zealand had approximately $394b worth of residential buildings — more than double the $136b of shares and bonds on the New Zealand Stock Market. Commercial buildings were worth $94.4b.
Together the value of commercial and residential buildings was $394.4b — greater than the combined value of the country’s other fixed assets; machinery, equipment and vehicles ($117.9b); infrastructure ($122.6b) and the stock market ($136.3b).
The research also showed KiwiSaver was an important source of funds for first home buyers — in the year to June 2016 there were 26,600 withdrawals, totalling $495m for the purchase of a first home.
This figure was almost double the $258m withdrawn in the previous year, a fact the report attributed to changes to the scheme which allowed for larger withdrawals.