Construction inflation in New Zealand slows as costs rise

Construction inflation in New Zealand's major cities is expected to slow in the coming years due to escalating costs, according to an industry report. at 6 percent this year, 3.5 percent next year and 3 percent by 2021, according to the latest report from Oceania Rider Levett Bucknall. Christchurch is coming off its 6% surge in bid prices after the 2015 earthquake, with gains expected to remain at 3% this year, last year and 2% next year. Meanwhile, Wellington 's call costs are expected to rise 6.3% this year, before slowing to 4% next year and 3% by 2021. [19659002ConstructioncostsinNewZealandhaverisenfasterthanthecountry'soverallinflationof11%supportedbyrecordlevelsoftourismandmigration"AttheNewZealandscaleclimbingexpectationsfor2018remainhighwithallregionsforecastinghigherdemandpriceindexesthancurrentlevelsinNewZealand"consumerpriceindex"RLBOceaniaPresidentEwenMcDonaldsaidinastatement"TheAucklandandWellingtonclimbingisexpectedtodrop50%by2021to3%whiletheChristchurchclimbwillremainsteadyat2%from2019"

] RLB noted that the Auckland construction market was under pressure from resources.

"The Auckland region continues to have strong growth through migration and tourism.Although the numbers have cooled, there is still much work to be done to support population growth in recent years, "continues the report. RLB said that the Auckland construction market, especially for projects worth more than $ 100 million, is "severely stretched" and that the withdrawal of the Fletcher unit Building and Interiors "leaves an important gap in the market".

"The subcontractor market is also subject to resource pressures, resulting in poor responses and volatile prices. Lack of qualified resources affects productivity and costs, which slows down projects and leads to higher preliminary costs and late completion of projects. These market problems could deter new entrants from filling Fletcher's gap.

In Christchurch, inflation offers are now stable and forecasts for 2019 are expected to remain close to inflation at 2%, according to the report.

"The Christchurch Reconstruction Summit has now been reached for residential and commercial projects."

"The escalation of construction has slowed down somewhat over the last period, and major and complex projects continue to experience extraordinary escalating trade-related spikes." There are still a number of significant ongoing projects as well as those to be completed next year.This will continue to put demand on key trades in the foreseeable future and will result in a continuous increase in supply prices. Other cities is also drawing resources from Christchurch as work becomes available. "

In the capital, Wellington continues to experience strong growth, with many projects underway while other major projects are on the way to completion. 19659002] "The escalation of construction costs continues to far exceed the levels of inflation. The outsourcing resources are exhausted and we are seeing significant price increases in various trades due more to a lack of competitive tension rather than to market inflation, "she said

" Many businesses continue to experience shortages of labor. in the Wellington market given the conditions prevailing in most other areas of New Zealand. This workload is unprecedented and has no end in view of the favorable economic conditions that currently prevail. "

McDonald's RLB stated that construction firms continued to report acute labor shortages

" Migrants have helped to reduce labor shortages. the number of technicians and trades workers who have moved to New Zealand on a work visa in recent years. Projected reductions in migration may affect future indexing rates if the demand for skilled labor is not met. "

(BusinessDesk)

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