Construction industry recovery in Australia and New Zealand: Key drivers for growth

Like many sectors globally, the Australian and New Zealand (ANZ) construction industry faced substantial challenges during the COVID-19 pandemic. Project delays, workforce disruptions, and supply chain blockages struck hard. But despite these hurdles, the industry is now on a path of recovery, driven by resilience, innovation, and new ways of working.

In this article, we explore construction industry recovery, including how the construction industry in ANZ is overcoming the pandemic's challenges, the role of technology in this transformation, and the emerging trends that will shape its future.

COVID-19's initial impact on ANZ construction

When COVID-19 hit, the construction industry in ANZ was thrown into turmoil. The immediate impacts were profound:

• Project delays and cancellations: Across Australia and New Zealand, many construction projects were put on hold or cancelled entirely due to uncertainty around the pandemic. With government-enforced lockdowns and social distancing rules, site closures became inevitable.
• Supply chain disruptions: The pandemic caused global supply chain chaos. The production and transportation of essential materials like steel, timber, and concrete experienced delays, driving up costs and pushing projects behind schedule. For instance, Australia’s construction supply chain heavily relies on imports from China, which slowed dramatically during the early stages of the pandemic.
• Workforce challenges: Labour shortages became a persistent issue, as workers either fell ill, were required to isolate, or faced travel restrictions. New health and safety protocols added complexity to an already strained workforce. Compliance measures—such as temperature checks, sanitisation stations, and social distancing on sites—also slowed productivity.

Despite these initial struggles, the ANZ construction sector is proving its ability to rebound, thanks to several key factors.

Economic recovery in the ANZ construction sector

As the region navigates its way out of the pandemic, construction industry recovery efforts in ANZ are being boosted by targeted government initiatives and renewed demand for housing and infrastructure development.

Government infrastructure projects: The Australian and New Zealand governments have played a critical role in kickstarting the construction industry's recovery. For example, Australia’s federal budget for 2021-2022 committed $110 billion over ten years to infrastructure projects. These large-scale initiatives provided jobs, stimulated the economy and revived the construction industry.

Housing demand surge: The housing market across ANZ experienced an unexpected boost during and after the pandemic, driven by low interest rates and government stimulus measures like Australia’s HomeBuilder scheme. New residential projects surged, particularly in suburban and regional areas, as remote working sparked a shift in housing preferences.

Positive growth in commercial construction: While the commercial construction sector took a hit initially, it also shows signs of recovery. Increased demand for office refurbishments, warehouse developments, and mixed-use projects is helping to fuel growth. This is evident in New Zealand, where non-residential construction was forecast to reach a high of $12.4b in 2023 and then remain steady on $11.7b from 2027 onwards.

Adoption of digital tools and remote technologies

One of the most significant shifts within the construction industry post-pandemic has been the adoption of digital tools and remote technologies. These advancements have helped maintain project continuity and efficiency, even when in-person work was limited.

Construction management software: As physical presence on-site became restricted, the use of digital construction management platforms grew rapidly. Tools like Viewpoint’s Jobpac allow teams to collaborate, monitor progress, and manage resources remotely, ensuring that projects stayed on track despite logistical challenges.

Building Information Modeling (BIM): Digital collaboration platforms like BIM have become critical for the construction industry, enabling real-time updates and collaboration among stakeholders. This technology allows for better planning and execution by creating detailed 3D models of projects, reducing errors, and improving efficiency.

Remote monitoring and virtual inspections: In response to the limitations on-site access, many ANZ construction firms turned to remote monitoring technologies and virtual inspections. Drones, for instance, are now being used to monitor construction sites, providing real-time data to project managers, while virtual inspections enable regulatory bodies to approve milestones without setting foot on-site.

Evolving construction practices

The challenges presented by COVID-19 have also spurred innovation in construction practices across Australia and New Zealand. As the industry moves forward, new methods are emerging to enhance efficiency, safety, and sustainability.

Modular and prefabricated construction: Modular and prefabricated construction has gained traction to reduce on-site labour and minimise delays. These methods also provide a safer alternative by limiting the time workers spend in potentially crowded environments. Prefabricated components are constructed off-site in a controlled environment, allowing for faster, more precise builds once transported to the site.

Sustainability and green building initiatives: There’s an increasing focus on sustainability as the ANZ construction industry embraces green building techniques. New Zealand’s commitment to a net-zero carbon future by 2050, alongside Australia's focus on energy-efficient buildings, has accelerated the adoption of sustainable materials, energy-efficient designs, and renewable energy sources.

Advanced safety protocols: The pandemic forced the industry to re-examine its approach to safety. Now, there’s an emphasis on robust health protocols and site safety. Post-COVID compliance measures are here to stay, including the use of personal protective equipment (PPE), improved site sanitation, and better ventilation systems.

Challenges and opportunities in the post-pandemic era

While ANZ has made impressive strides towards construction industry recovery, some challenges still linger, alongside significant opportunities for growth.

Supply chain disruptions: Ongoing supply chain issues remain a key hurdle, particularly as global markets continue to experience instability. Material costs have risen, and procurement timelines remain unpredictable. Addressing these issues will require strategic sourcing and investment in local supply chains where possible.

Skills shortage and digital upskilling: Labour shortages remain a concern, particularly as the industry transitions toward more digital and tech-driven methods of construction. There is a growing need to upskill workers in digital technologies such as BIM and construction management software. Governments and industry bodies are actively working on training initiatives to bridge this gap.

Opportunities in sustainable infrastructure: The shift towards sustainability presents enormous potential for the ANZ construction sector. Investments in green infrastructure projects, renewable energy installations, and eco-friendly housing developments offer new avenues for growth. The ongoing commitment to sustainable building practices will drive recovery and ensure long-term resilience.

A resilient future for ANZ construction

The construction industry in Australia and New Zealand has demonstrated incredible resilience in the face of the COVID-19 pandemic. As the sector moves forward, adopting digital tools, new construction practices, and focusing on sustainability will be critical to its ongoing recovery.

While challenges remain, from supply chain disruptions to workforce shortages, the future is bright. By embracing innovation and remaining adaptable, the ANZ construction industry will continue to rebuild stronger, laying the foundation for a more sustainable, technology-driven future.

Want to know more about the future of construction in ANZ? Download our latest report.