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NATIONAL CONSTRUCTION PIPELINE REPORT 2016 - FACT SHEET

The National Construction Pipeline Report

• The National Construction Pipeline Report 2016 provides national and regional forecasts of activity in three categories; residential building, non-residential building, and other construction, such as roads and infrastructure, over a six-year period until December 2021.
• Is one of few forecasts available that compare its results to the previous forecasts. Forecasts are given for four regions Auckland, Canterbury, Waikato/Bay of Plenty and Wellington, with aggregated data provided for the rest of New Zealand.
• The report is commissioned by the Ministry of Business, Innovation and Employment, and is jointly prepared by BRANZ and Pacifecon (NZ) Ltd.
• Visibility of New Zealand’s forward construction pipeline is intended to improve the productivity of the building and construction sector and could help moderate its boom and bust cycle.

National picture

• The National Construction Pipeline forecasts from the third report were a good prediction of what happened in 2015, but were slightly high for residential construction, high for non-residential building, and close to actual for other construction. There is a slight delay in the previously forecast growth for the next six years, but it retains a similar shape, with a smoother longer peak.
• National construction value has experienced sustained growth averaging 7 per cent per year since 2011, and is forecast to grow to a peak of $37 billion in 2017. This represents a rate of growth not seen in 40 years. These forecasts indicate a 2017 peak that represents 20 per cent ($6.2 billion) more value than at the end of 2015. This peak is 28 per cent higher than the previous peak in 2007, and 59 per cent higher than the low of 2010.
• The annual value of all construction nationally is forecast to remain above 2015 levels for the duration of the forecast period to 2021. Residential building growth in Auckland accounts for more than half of the total New Zealand construction growth.
• The annual value of residential building is expected to increase by 22% to a peak in 2017 ($21 billion) and all non-residential construction forecast to grow by 20% to a peak in 2018 of $16.8 billion.
• Actual data from 2015 shows our forecasts in previous reports have been reasonably accurate. Non-residential building actual data was however significantly lower than the 2015 report had expected. The 2016 report now expects this growth in non-residential building to be more gradual with a later and longer peak ($8.8 billion) in 2018.
• The national non-residential building forecast continues to grow, however has become a less distinct peak, spread out over a longer term. Contributing factors are deferred construction in some of the Canterbury anchor projects, a number of new university developments nationally, and the continued increase in Auckland non-residential building (such as schools and retail) as new suburbs are established and existing ones expanded.

Notable trends

• Auckland residential building value grew by $0.7 billion in 2015, accounting for 58 per cent of the total national growth of $1.3 billion. Auckland residential building is projected to increase by another $3.3 billion by 2017, which represents 53 per cent of the total national peak of $6.2 billion in 2017.
• Waikato and the Bay of Plenty combine to form the third largest region, by value of work and are predicted to become the second largest by the next report.
• Higher density housing increases its share of national residential construction over the forecast period; multi-unit dwelling consents represented 30 per cent of consented dwellings in 2015, and are projected to be 40 per cent by 2021.

Auckland’s construction sector is growing at an amazing rate

• Auckland dominates the national demand for building and construction, accounting for over a third of all building and construction, by value from 2015 to 2021.
• Total value of activity in Auckland increased 9 per cent in 2015; this increase in value is forecast to continue and peak in 2018 at $17 billion and to remain above $16 billion for the remainder of the forecast period.
• The report forecasts 94,200 new dwelling consents in Auckland between January 2014 and December 2021. Dwelling consents are forecast to stay at high levels per year throughout the forecast period.
• The number of multi-unit dwellings consented each year in Auckland is forecast to continue to increase its share of all dwellings consented, and is expected to overtake detached dwellings by 2021.
• All non-residential construction in Auckland grew 4 per cent over 2014/15 and is expected to steadily increase by 49 per cent to an elevated level of $7.3 billion in 2018.

Canterbury’s non-residential construction grows and residential building remains at high levels

• Building and construction activity is at a high level in Canterbury as a result of the intensive rebuild activities underway, with total construction activity forecast to remain at high levels into 2016 Q4.
• Residential activity reached its peak in 2014 Q4, but is still forecast to remain at elevated levels over the year before slowly declining. 13,800 dwellings consents were consented during 2014 and 2015, and another 14,000 detached houses and 6,000 multi-unit dwellings are forecast to be consented in Canterbury in the six years ending December 2021.
• All non-residential construction is forecast to experience continued growth, peaking in 2016/17 at $2.9 billion and remaining above $2.4 billion until 2019, before steadily reducing to around $1.7 billion in 2021.

Other regions

• The Waikato / Bay of Plenty region experienced an intense 24 per cent residential growth in residential building value in 2015. Last year’s report expected total value of all building to peak in 2018 ($5.6 billion), but this revised forecast now shows the peak in 2017 ($6.1 billion).
• Wellington is the only reported region with non-residential construction by value at a higher level compared to residential building, and this is expected to continue throughout the forecast period.
• Wellington had the second highest ratio (43%) of multi-unit dwellings consented for 2015 with half of all consents forecast to be multi-unit towards the end of the forecast period.