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Pending boom bigger than 2004-08 - BIS Shrapnel

Look forward to a construction boom peaking in 2016 that will be bigger than anything we've seen.

Work on leaky buildings will add to the momentum of the Auckland housing sector and Canterbury rebuild, according to construction analyst BIS Shrapnel .

Looking out to 2019, BIS Shrapnel says building consent values are forecast to reach a new record high in 2016 to more than $10 billion.

“This level of activity would exceed the historically high levels recorded over the boom period of 2004-08.”

“We expect Auckland to experience strong growth in residential construction over most of the next five years,” BIS Shrapnel senior project manager Adeline Wong says.

The number of dwelling consents in Auckland is expected to increase from 4760 in 2012/13 to an estimated 6350 in 2013/14 and then to around 10,000 by 2017/18.

While Christchurch reconstruction will provide a major boost to the non-residential building sector over the next five years, BIS Shrapnel also expects a pick-up in new building and refurbishment activity in the warehouse, factory and office building sectors in the North Island as leasing activity gathers pace in response to domestic and global economic growth over the next two to three years.

“The non-residential building sector over the next five years may get an extra lift from potentially wider earthquake strengthening work in office buildings and schools in Wellington in particular.

“However, there is also a downside risk to our forecasts in that the timing and scale of Christchurch reconstruction and also seismic work in Wellington may not be as expected.

“Some owners of quake-damaged and earthquake-risk properties may not commit to redevelopment in the short term, which would affect the overall outlook.”

c.hutch@clear.net.nz

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Comments and questions
4

Hard to believe.

There is a well documented relationship showing residential building lagging home sales. Seasonally adjusted home sales have been dropping over the last 5 months and the trend is for that to steepen, not accelerate. Therefore I think there is a real short term risk that residential building has or is about to reach its peak.

I also think its starting to dawn on people that that the fabled CHCH reconstruction was never completely real. Don't forget how many people in CHCH moved to Auckland and Australia post quakes.

mate you may be called the watcher but I think you've got your eyes closed. The Chch rebuild not compleytely real?? Have you been down there and seen the amount of work to be done? A few thousand may have relocated but you obviously have no idea about whats going on in your own country.

Its real but its not the magic bullet everyone thinks it will be. The actual scale of it will be smaller than many optimistic commentators believe. Further - the scary thing is - after a period where it did underpin a modest pace of economic growth is what happens when it stops (which is likely to coincide with a housing market going backwards in about 3 years...)

Auckland region the place to be this decade, but keep out a watchful eye for Queenstown outperformance.