Building sector in for hard time

After five weeks of lockdown, the South’s construction industry is set to get rolling again under Alert Level 3 restrictions and in the face of employment uncertainty.

It is predicted nearly 30,000 jobs could be lost in the sector nationally in the next year.

Infometrics senior economist Brad Olsen said economic forecasters had yet to do the work at a regional level but big players in the industry would shed jobs and some small players would go under.

‘‘Of course, something like Dunedin Hospital is going to provide a lot more support under the industry going forward,’’ he said.

Infometrics predicted 250,000 New Zealanders would lose their jobs over the next year as a result of the global pandemic.

The construction industry is predicted to lose 29,400 jobs in the year — the third hardest-hit sector after accommodation and food services (53,300 jobs lost) and retail and wholesale trade (41,200).

‘‘We’re forecasting nearly a complete halving in residential consents nationally over the next few years.

‘‘That does mean that that level of activity that used to sustain that workforce is not going to be there,’’ Mr Olsen said.

Naylor Love chief executive Rick Herd agreed with the estimate.

‘‘Queenstown is likely to be very hard hit,’’ he said.

‘‘Dunedin’s a relatively small market, so it’s likely to be less hard hit,’’ Mr Herd said.

About 85% of the construction industry was funded by the private sector, he said.

‘‘Most of your residential and most of your commercial is funded by the private sector — that part of it is likely to dry up.

‘‘Well over three-quarters of the construction industry’s revenue is likely to be hard hit through the downturn.

‘‘You’re already seeing major property investors like SkyCity laying off their property development staff, which is not a good sign.’’

He understood about 300 projects had stalled over the past month — ‘‘and that’s likely to continue’’.

‘‘While the Government is talking about spending, unless they can find a way of motivating the private sector — in construction — to spend, then the construction industry is going to be very badly hit.’’

Nevertheless, Registered Master Builders Association Central Otago branch president Alister Saville said if there were to be an impact in the residential market it would not be immediate.

The predicted prolonged period of economic disruption could affect the building of new houses if would-be home builders became buyers of existing stock.

He was optimistic the residential property market in Central Otago would continue to attract people who could afford to build new homes — and he was hopeful there would not be job losses in the industry in what had been a strong market.

‘‘We certainly have had no jobs pulled on us.

‘‘In four to five months when everybody gets back and jobs start finishing, will there be jobs there to start?

‘‘I think there will be,’’ he said.

hamish.maclean@odt.co.nz

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