Public sector projects strengthen Australia and New Zealand’s construction market
Construction markets in Australia and New Zealand have remained active, driven by major infrastructure-related activities and strong residential building activities.
Our latest Australia and New Zealand market intelligence report finds that high inflation, skills shortages and rising costs of construction are starting to weigh in on private sector activity, while public sector projects are pressing ahead.
In Australia, the rapid rise in construction costs experienced in 2021 remain the most significant challenge across Australian construction markets and have influenced markets in different ways. The public sector has pressed ahead with major infrastructure projects while the private sector remains cautious.
In New Zealand, infrastructure construction activity also remains high. Higher fuel and commodity prices, drag on global economic activity and financial market volatility, have negatively influenced construction costs by limiting material availability and increasing costs.
Inflation surges global supply chain disruptions, increase global energy prices and tight labour market
The Australian and New Zealand economies continue to be affected by the uncertainty around volatile market conditions and the unanticipated effects of the war in Ukraine including global energy prices, rising interest rates and ongoing global supply chain disruptions.
Despite a slowdown in global growth, Australia’s economy has recorded consistent expansion with GDP increasing by 0.8 percent over Q1 and 3.4 percent through the year to March 2022. In New Zealand, expectations of increased consumption and economic growth over the first quarter of 2022 were held back by high inflation causing the economy to shrink.
Meeting the challenge of competition through collaboration
The Australian defence sector has its largest forward pipeline of construction work in its history. This, like other sectors, has been subject to a range of external factors including the global pandemic, the conflict in Ukraine and government-led stimulus activity. These have created the perfect storm of decreased supply and increased demand and have resulted in a significant escalation in building costs which is driving an increased number of insolvencies. In this report, we look at how the defence industry can prevent insolvency through collaboration.
Download the report to read more about the challenges and opportunities affecting the Australian and New Zealand construction industries.