Residential and infrastructure projects drive Australia and New Zealand’s construction activity
Our latest Australia and New Zealand market insight report finds that construction activity across Australia has continued to grow over Q4 2021, driven by a surge in housing and infrastructure projects. However, New Zealand’s construction industry remained heavily impacted by the COVID-19 restrictions over Q3, with total building activity declining by 8.6 percent year-on-year during the quarter.
Skilled labour shortages and global supply disruptions continue to constrain Australia and New Zealand’s construction supply chains and are causing costs to surge in both countries recover from lockdowns caused by COVID-19.
Global supply chain disruption is continuing to cause considerable challenges on projects under construction and in the pipeline. As an example, in the 12 months to December, construction costs for non-residential projects increased by 8.0 percent in New South Wales, 8.8 percent in Queensland, and 14.2 percent in Western Australia, reflecting the challenging market conditions being experienced.
In New Zealand, non-residential activity has been subdued but residential construction surged over 2021, driven by the government-led stimulus. With a massive pipeline of housing projects still yet to break ground, there are concerns over the capacity of the market to complete this work.
COVID-19 lockdowns slow economic recovery
Australia’s economy performed better than expected in Q3, despite lockdowns across several states and the emergence of the Omicron strain of COVID-19. While the economy contracted by 1.9 percent in the third quarter, the contraction was far less than anticipated, which was the result of strong household consumption across states that were not subject to lockdowns.
In New Zealand, the economy contracted by 3.7 percent over Q3, driven by a fall in domestic and international demand. However, with the recent change in approach to live with the virus rather than eliminate it, we are unlikely to see a similar lockdown to Q3 2021. While the new way of living with COVID-19 is still likely to have some short-term disruptions to business activity, the impact will likely be less severe than that seen in 2021.
Time to put sustainability at the heart of procurement
The building and construction industry is responsible for more than a third of energy consumption and nearly 40 percent of direct and indirect carbon emissions globally. Now is the time for the construction industry to take action to deliver projects that address the climate emergency.
This quarter we look at why sustainability should be embedded in procurement to ensure the construction industry can make its fair contribution to resolving the climate and biodiversity crises.
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.