City building boom boosts jobs

By John Cousins

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Classic Builders sales manager Mark Hooper at a house under construction in Bethlehem. Photo / Andrew Warner
Classic Builders sales manager Mark Hooper at a house under construction in Bethlehem. Photo / Andrew Warner

Spec house builders and out-of-town buyers are helping to drive a surge in building consents that is returning hundreds of jobs to Tauranga's once depressed building industry.

The 212 building consents lodged with the Tauranga City Council in September was 50 per cent up on the same time last year, and the pattern was set to repeat itself this month.

The return of confidence to the industry has seen Tauranga-based Classic Builders take on at least 10 new administrative staff this year and subcontract a couple more construction gangs.

Director Peter Cooney said the firm was back up to where it was prior to the credit crunch hitting in late 2008 when work fell to one or two contracts a month. "We are now back to 15 to 20 jobs a month ... demand is good."

He believed the industry was back on its feet and getting back to normal, however it was still vulnerable to interest rates and land prices.

Mr Cooney put some of the surge in consents down to people getting in before the Reserve Bank's new loan-to-value ratios took effect, restricting the amount of cash banks could lend. There was a "bit of a panic" by people getting their deals signed up before the new lending rules came into force on October 1.

The spec building market had also taken off this year.

"A lot of people prefer to buy the finished product. We are building a lot more spec houses than a year ago."

The council's figures reinforced that the industry was on the path to recovery from the depths of the global credit crunch in late 2008 and early 2009 when consents issued for new houses in Tauranga bottomed out at less than 20 a month. It received 93 building consents in the first fortnight of this month.

Classic Builders sales manager Mark Hooper expected the upswing to continue for at least the rest of this year. "There is plenty of business out there."

Mr Cooney said demand depended on interest rates staying low and land prices not going up because about 60 per cent of the housing market was land and building packages up to $450,000.

Thorne Group director Peter Buck said they were getting more out-of-town inquiries, particularly from Auckland and Christchurch. Show home inquiries were also converting into sales more frequently.

Mr Buck said he had seen an escalation in spec houses being built over the last six months. Another big aspect of its business, the Urban Ridge subdivision, was in keen demand. Half of stage four's 30 sites had sold before building even started.

"The level of confidence in the market place is higher."

He said they had not seen the impact of the bank lending restrictions yet but expected a surge from buyers with pre-October 1 approvals over the next two or three months.

Signature Homes owner Craig Williams said spec builders were taking a calculated risk that the market had returned.

"We have been on the improve for the last couple of years and the last 12 months has improved even more."

- Bay of Plenty Times

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