The high number of cranes being used on construction sites indicates a strong construction sector, a quantity surveying firm says. Photo: RNZ Pacific / Lydia Lewis
A record number of cranes at work shows resilience in the country's construction sector, according to a new report.
The latest crane index from quantity surveyors Rider Levett Bucknall (RLB) showed 157 long-term cranes were on construction sites across the country's seven main centres in the first quarter.
It was a net increase of nine cranes from the previous edition in September.
However, AUT engineering and construction professor John Tookey says the tally does not mean the construction sector will continue to expand this year.
The first quarter report showed there were 103 long-term cranes at construction sites in Auckland, 15 in Queenstown, 14 in Christchurch, nine in Wellington, six in Dunedin, and five each in Hamilton and Tauranga.
The rise in the RLB index figures came after another report outlined ongoing pressures in the construction sector.
The increase in crane numbers was largely driven by the civil construction sector, which now had six more, RLB said.
File pic Photo: RNZ / Angus Dreaver
On the other hand, the number of residential crane numbers decreased, from 76 cranes to 71, with residential cranes making up 45 percent of the cranes in New Zealand - the previous count was just over 50 percent of the total.
RLB director Chris Haines said the latest crane index showed ongoing resilience in the construction industry.
"We have to remember though, the cranes that are being put in place on site and even the new cranes - a lot of those cranes are for work that was committed in 2022 and 2021," he said.
"There has been a slight dip in the residential count, which we expect to become more pronounced in future counts due to financial lending constraints and residential market conditions.
"Infrastructure repairs from Cyclone Gabrielle may also influence long-term crane numbers in the future."
RLB said the total value of building work over 2022 increased 20 percent on the year before, passing $30 billion for the first time to reach $34.4b.
Cranes commissioned 'a long time ago'
But the fact there were more cranes in operation did not mean the construction sector would continue to grow in 2023, AUT engineering and construction professor John Tookey told RNZ's Morning Report on Friday.
"It's an indicator, but it's a lag indicator in the sense that they're on sites that were commissioned a long time ago and they will be gradually diminishing over a period of time. But the effects that are occurring just now are - it takes some time before they feed through."
"So the total number of new commissions will drop off" AUT engineering and construction professor John Tookey
Those effects were largely coming from the Reserve Bank, which has been increasing interest rates to get inflation under control.
"Basically, what's going to happen is as a result of increasing interest rates as the efforts to fight inflation take hold, then the most sensitive sector in the market is the housing sector - because obviously all the money that's coming into the housing sector is borrowed, so the increased cost of borrowing reduces the amount that people want to expose themselves to," Tookey said.
"So the total number of new commissions will drop off. Will it lead to job losses? Well, eventually yes. But again, there's a backlog of work that needs to be worked through, and the job losses component is something which is going to be a three- to six-month indicator because of the lag effect."
There has already been a "slight dip" in the number of cranes on residential sites, according to Haines, "which we expect to become more pronounced in future counts due to financial lending constraints and residential market conditions".
There was also "continued capacity pressure" he said, particularly in the upper North Island.
"The government's Budget announcement in May is eagerly awaited, which will have significant implications for the health, education, housing and civil infrastructure sectors in particular. We are expecting some winners and some losers, and particularly given the infrastructure repair and resilience work on the back of Cyclone Gabrielle and with the City Rail Link announcement in March of a $1.074b cost increase and 12-month delay."
Tookey said New Zealand needed to attract more skilled people in the construction industry to ease capacity constraints and inflation pressures from the worker shortage.
"We don't necessarily produce as many engineers, for example, as we'd need in society, and there are various different long-term skill shortages that we need to address. So as the numbers tick up, the pressure on those long-term skill shortages will ease, which is a good thing."