According to industry analyst and economic forecaster, BIS Shrapnel, New Zealand’s building boom is set to continue, boosted by surging net migration, accommodative monetary policy and robust economic growth.
The firm’s latest Building and Construction in New Zealand 2017-2022 report showed the total value of building authorised (residential and non-residential) is expected to peak in the financial year ending March 2017 and remain above NZ$10 billion in the next two years before activity levels off.
The slight decline in 2017/18 is expected to be the first year of negative growth in the overall sector for five years, while dwelling construction is forecast to continue growing until 2019/20, representing seven years of consecutive growth. Following a period of cyclical adjustment, construction activity is forecast to once again rise above $10 billion at the end of the outlook period in 2021/22, back near the record high reached this year.
The dynamics of population growth is a major driver of construction activity and a key determinant of medium- and long-term trends. Reflecting this, exceptionally high net migration in recent years has contributed significantly to strong growth in dwelling building activity. Net migration continued to surge in 2016 and is likely to continue, with the 2017 year ending June set to be another record year of inflow.