The total value of building work consented last year was $6 billion higher than pre-Covid
By Greg Ninness
Damn the Covid torpedoes, it's full steam ahead for the construction industry.
In spite of the economic disruption caused by Covid and now international events such as Russia's invasion of Ukraine, New Zealand's construction industry has a record pipeline of work lined up which should keep it operating at maximum capacity for the next couple of years.
Despite Covid restrictions, capacity constraints and economic uncertainties, the value of all building work consented in 2020 remained almost unchanged compared to 2019 and then surged dramatically in 2021.
According to Statistics NZ, the total value of all building work consented last year was $29.38 billion, up $6 billion (25.7%) from where it was in 2019, before the world went mad.
Over the last seven years the value of building work consented has doubled, from $14.63 billion in 2014 to $29.38 billion in 2021.
Some of that increase will be the result of inflationary pressures, but not all.
For example in the booming residential construction sector, the value of new dwelling consents increased by 38.1% in the 12 months to end of February this year compared to the end of February 2020.
Over the same period the number of new dwellings consented increased 31.4% and now sits at a record high.
So while inflation has been a factor in the value of construction work being consented, it does not account for all of the increase and the volume of work being consented also looks very strong.
And it is not just residential building work that's on a roll. In 2019 the total value of non-residential building work consented was $7.46 billion.
Last year that figure increased to $8.19 billion, up 9.8% compared to pre-Covid levels.
That's not bad considering that changing shopping patterns and a lack of tourists have caused a slump in consents being issued for retail premises and traveller accommodation, while changing work patterns have crimped the growth in consents for new office buildings.
That has been partially offset by strong growth in consents for new industrial space such as warehouses and factories. But overall, the total value of new commercial buildings consented last year was down 9.7% from 2019 while the total amount of new commercial floor space consented last year was at its lowest level since 2001.
However the relatively weak performance of commercial building activity has been more than made up for by dramatic rises in construction work in the health and education sectors.
Last year the total value of consents issued for buildings such hospitals and nursing homes hit a record high of $1.029 billion, up by 70% compared to the previous record of $606 million set in 2019.
Similarly, the total value of consents issued for education buildings hit a new record of $1.46 billion last year, up 37% compared 2019.
So while economic uncertainties abound and are likely to be with us for the foreseeable future, there are no signs that tradies will be hanging up their hard hats any time soon.
Note: Interest.co.nz's Commercial Building Consent Analysis page tracks consents issued for the main commercial building types (office, retail, industrial, hospitality) in the major regions, with quarterly figures provided on total space consented, average size of consents, average value of consents and the average value per square metre.
This story was originally published on Interest.co.nz and has been republished here with permission.