Slow vaccination programmes hamper Australia and New Zealand’s economic recovery

Australia and New Zealand’s construction outlooks have improved over Q2 2021, however slow vaccination programmes, rising costs from supply chain pressures and labour shortages create considerable challenges.

Our latest Australia and New Zealand market insight report finds that government stimulus helped grow Australia’s pipeline of construction work while the private sector continues to recover. In New Zealand, the construction industry has continued to feel the impacts of the COVID-19 pandemic, despite restrictions easing and low COVID-19 case numbers.

While the construction outlook looks positive for both countries, there are increasing concerns around the surge in building material costs due to global supply chain bottlenecks. We expect this to result in a high level of construction cost escalation over 2021 for all markets across Australia and New Zealand. Adding to this pressure is the increasing skills shortages being felt across the region, which is not expected to ease until international borders reopen.

Our construction cost escalation forecasts for non-residential projects in 2021 have been revised up to 4.5 percent for Perth, four percent for Auckland and Sydney and 3.5 percent for Adelaide, Brisbane, Christchurch and Melbourne.

Slow vaccine roll-out risks economic recovery

Australia’s economic recovery experienced better than expected economic growth over the last quarter, helping boost confidence which paves the way for a stronger and swifter economic recovery. In New Zealand, after contracting over the December quarter, the economy returned to growth in Q1 of 2021, driven by a booming housing market and strong employment and retail spending. The slow COVID-19 vaccination roll-out in both countries will continue to be a downside risk for the economic outlooks.

Cost management’s digital transformation

As the construction industry adapts to COVID-19’s perfect storm of change, with its challenges and threats, two things are already apparent: clients are demanding continuous improvement and the supply chain must respond by ramping up its adoption of digital and collaborative working.

This quarter’s focus article outlines six ways to turn data into tangible actions and provides an overview of our data driven digital service delivery model which has provided us with a platform to provide actionable insights that are tailored to be aligned and relevant to our clients’ goals.


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, ANZ

t: +61 282 450 000