Residential construction activity continues to cool. Despite New Zealand having consented to large amounts of work to meet the demand for housing, building activity has failed to keep pace, and a backlog of work has developed, with completion times stretching out.
Several high-profile projects have been put on the back burner as financial considerations and large increases in building costs and interest rates continue to depress development activity.
The downturn has been relatively modest so far, with developers completing projects already on the books. However, we expect to see tougher conditions in 2024, with residential construction falling further than the current eight per cent from its 2022 peak.
This comes at the same time the market is experiencing an acute shortage of housing supply, exacerbated by net migration of nearly 130,000 in the year to October 2023.
We know how the supply-demand imbalance plays out – with scarcity raising prices for properties across the country. So, we will be watching developments closely here in the year ahead.
