Strong pipeline forecast shows industry can prepare for future

The Construction Sector Accord says that forecasts of a strong construction industry pipeline show that the sector can and must prepare for a different future.

The National Construction Pipeline Report 2021 was released today by the Ministry of Business, Innovation and Employment (MBIE). It provides a forward view of national construction value for the six years to December 2026 and shows that while New Zealand's total construction value decreased by 5.7 percent in 2020 to $42.6b, growth is forecast for the next six years.

Read the National Construction Pipeline Report 2021(external link) - mbie.govt.nz

"It's pretty extraordinary to see such strong forecasts in the Pipeline Report. This time last year the predictions were fairly dire, but we now know the sector has built up an incredible head of steam since then, with record building consents. Our worst problems right now are not enough people and materials to do the job," says Accord Transformation Director Dean Kimpton.

The report shows that despite disruptions from COVID-19, construction activity is forecast to grow, driven largely by the continued strength of the residential sector.

Key projections in the report are that:

• construction activity will grow steadily to about $48.3b in 2024, driven largely by the continued strength of the residential sector
• 265,000 new dwellings are forecast to be consented over the next six years, an average of over 44,000 per year
• non-residential activity is forecast to reach $10.2b in 2025 and $10.3b in 2026
• infrastructure activity is forecast to reach $11.2b in 2026, dominated by transport, water and subdivision projects.

Mr Kimpton says the report should give industry confidence to invest and make changes.

"As a sector we need to get ahead of the game. We need to invest in our people and cast a wider, more diverse net on recruiting. We need to up our game on innovation. We need to accept that climate change also means a change in how we build. At the Accord we think this strong pipeline should give the sector confidence about the changes that are needed. The work is there. The investment will be worth it," he says.

The report is based on building and construction forecasting by the Building Research Association of New Zealand (BRANZ), and Pacifecon NZ Ltd data on researched non-residential building and infrastructure intentions.