Construction costs rise expected in wake of floods
This makes it New Zealand’s most expensive weather-related event. However, it’s well short of the cost of repairs that followed the 2010-11 Canterbury earthquakes, which came in at about $40 billion (spread over many years). Repairs following the 2016 Kaikoura earthquake cost around $2 billion.
To put these numbers in perspective, nationwide building activity (including infrastructure) is running at more than $50 billion a year. The industry is already stretched to capacity, especially in the residential building sector.
This is a major contrast with the Canterbury earthquake rebuild, when the industry was starting from a depressed state in the wake of the GFC recession.
As a result, Westpac economists suspect flood recovery work won’t end up being much of a boost to building activity – rather, some projects will be delayed or shelved while the repair work takes priority.
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