Canterbury building work stabilises after decline
Construction demand is picking up after a flat patch early last year, according to a report by Rider Levett Bucknall.
Demand for the construction of commercial buildings remained high in Auckland and Wellington and was picking up in Waikato, RLB said in its Forecast Report 90.
The quantity-surveying and project-management consultancy said underlying demand for construction work was robust, though holding that back was investor caution, banks tightening credit and skill shortages.
Construction in Canterbury was stabilising after having declined in 2016; however, it was still relatively high.
More tradespeople arriving to work in New Zealand had helped to alleviate some shortages in labour in the construction sector during 2018.
RLB’s director of Wellington commercial, Grant Watkins, said he expected the Government to continue to focus on bringing in more trades workers to the country this year, given the big construction workload to meet housing needs.
Banks had tightened up on access to credit, and increased capital requirements for banks meant there was likely to be more tightening over the coming years.
Demand for new retail outlets and industrial buildings was supporting Auckland’s non-residential construction sector, and had driven the growth in nonresidential construction in 2018.
A rise in demand for industrial, farm and storage buildings also showed increasing confidence in the rural sector.
But concern over Government policy changes and the impact on costs was hurting businesses’ appetite to invest in buildings.
Another area of uncertainty was the willingness and capacity of major building firms to take on large-scale projects after Fletcher Building said it was not taking on any more new work in the sector.
However, the outlook for commercial construction remained positive despite that caution.