Mortgage adviser says construction will be critical to balancing out prices
New Zealand’s construction sector has rebounded after a “tumultuous year” according to the 2020 Construction Sector Progress Report, and residential construction intentions remain high despite the October 2020 quarter seeing a 28% decrease in the sector’s GDP.
The report noted that most of the industry was supported by the government’s wage subsidy during lockdown periods, though the majority of the sector was back at work at Alert Levels 2 and 3.
Only 36% of construction roles required the wage subsidy extension, dropping down to 8% for the resurgence wage subsidy – a promising indicator that the majority of planned construction is now back on track.
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“It goes without saying that 2020 has posed unprecedented challenges for New Zealand and our construction industry,” Construction Sector Accord co-chair Chris Bunny commented.
“The economic, physical and mental health impacts of COVID-19 have been significant. However, the 2020 Construction Sector Progress Report has highlighted that the collaboration between government and industry has been critical in getting us through this tumultuous year.
Increasing residential construction has been deemed critical to balancing out the current supply issues in the property sector, and mortgage adviser Ajay Kumar, of Global Finance, said the construction sector has a significant opportunity to ramp up its scale – however, he believes the closed borders will likely still cause some pain.
“Demand for housing is still much lower than supply, and low interest rates are definitely supporting the housing market,” Kumar said.
“Tight lending criteria from the banks is the only moderator at the moment, but so long as people are ready to buy homes and go to the banks for loans, prices will rise.”
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“I’ve seen that the government is spending money on infrastructure projects, and that combined with the construction sector will also support the property market,” he explained.
“It will also create more jobs, though it’s somewhat difficult right now because the borders are closed. But the construction sector definitely has a huge opportunity – personally, I haven’t had a single client who has lost their job who was associated with the construction sector.”
“In my opinion, recovery is not going to take place until perhaps the middle of next year,” Kumar added.
“Those who are associated with the property market, either directly or indirectly, will be the ones who benefit post-COVID.”
