Government stimulus places pressure on Australia and New Zealand construction

Our market insight report finds that a growing pipeline of projects across Australia and New Zealand is benefiting both economies, but what impact will this have on the construction markets?

A surge in new housing construction and a growing pipeline of major infrastructure projects is expected to put significant pressure on Australia’s construction markets over 2021, with shortages of building materials and increased costs likely. New Zealand’s construction market outlook is improving due to significant government stimulus, however, skills shortages and supply chain constraints continue to be the biggest challenge in the industry.

In our latest Australia and New Zealand market insight report, our construction cost escalation forecasts for non-residential projects in 2021 have been revised up to 1.5 percent for Adelaide, 2.5 percent for Christchurch, Melbourne and Sydney, 3 percent for Perth and 3.5 for Auckland and Brisbane.

Economic recovery

Australia’s economic recovery continues to beat expectations, with GDP rebounding by 3.1 percent in the December quarter of 2020. The key drivers of this growth were the further relaxation of trading restrictions and the pent-up demand in Victoria, following the Melbourne lockdown over Q3. As restrictions eased, household spending on services increased as they become more readily available. 

New Zealand’s economy shrank by 1 percent over the December quarter, driven by disappointing market expectations and weak construction activity. After rebounding by a record 13.9 percent over the September quarter, momentum slowed over Q4 as industries continued to face challenges brought on by the pandemic. Annual growth also declined by 0.9 percent, after growing 0.2 percent in the 12 months to September 2020.

Driving better outcomes across capital programmes

Our quarterly market insight report shines a light on construction industry trends and challenges. If understood and used correctly, this type of information can drive the intelligence needed to make better informed decisions about capital programme delivery.

However, insights without the ability to act upon them are at best interesting, at worse, distracting. Organisations that have a culture of continuous improvement and a desire to challenge the status quo, benefit the most from this data. 

This quarter’s focus article outlines five areas to drive better outcomes across the capital programme and accelerate the return on capital investments.


Download the report to read more about the challenges and opportunities affecting the construction industry in New South Wales, Queensland, South Australia, Victoria, Western Australia, Auckland and Christchurch.


For further information contact:


Simon Kearney
Director - Real estate

t: +61 282 450 000