Construction sector set for a 'big deceleration phase', economist Cameron Bagrie says

An economist says the construction sector can't keep up with all the work that's in the pipeline across New Zealand.

The latest building consent data shows that 50,736 consents were granted in the year to June. More than 4000 consents were granted in June alone.  

While that 50,736 figure was down "a trickle" - 2 percent - compared with the year to May, independent economist Cameron Bagrie said there was still $32 billion worth of construction work to be completed across the country.

"The construction sector cannot do all that work," he told AM host Melissa Chan-Green.

"Yeah, we're consenting 50,000 units - the physical capacity of the construction sector, to build residential homes, is about 35,000."

Bagrie said consents would now continue tailing off. 

"That's what we're seeing, anecdotally, on the ground," he said.

"I suspect they're going to tail off real sharply in the next six to 12 months.

"Is there reason to panic just yet? Well, the answer is no because the sector can't keep up."

Because of the sector not being able to keep up, Bagrie said many projects were being "parked".

"The construction sector is going to go through a big deceleration phase," he said. 

"It's a big part of getting inflationary pressure down - the construction sector needs to slow down and slow down a lot."

The consent figures from Statistics NZ showed Auckland had the highest consent numbers in June with 21,609 issued - up 14 percent from the same time last year. Canterbury followed with 8628, up 33 percent year-on-year.

Wellington had 3892 consents issued in June, up 21 percent.