Project managers, marketing, drafting and other staff “right across the board” no longer worked at Classic due to the housing downturn, Cooney said.
High interest rates, material prices up 40% in the past three years, lack of land and high council costs among the reasons demand for new housing dropped, Cooney said.
BCI New Zealand’s top new house builder table ranks Classic one of the busiest builders. It came seventh on the table for new residences completed in the year to March 2024, but sixth on the table to July 2024.
“We used to build 700 to 800 houses a year nationally but now we’re down to about 350″, Cooney said.
Classic had pared back some of its operations: “We’re not into the retirement village sector as much as we used to be.”
Staff were down by nearly 100 in the past year and a half, partly because “we didn’t replace them when they left. It’s just the way the market has gone. The construction sector has taken an absolute hiding and it’s really hurting people due to high interest rates”.
In 2021, Classic Group and the New Zealand Super Fund established a $300 million partnership for thousands of new homes.
The Kaha Ake [Stronger Together] partnership, which NZ Super holds an 80% share in, said it would focus strongly on meeting the chronic demand for quality, affordable housing.
Today, Gavin Hunt of Signature Homes said some of the national building businesses had also let go some project managers or estimators.
“But at the national office, we’ve actually added to the team,” Hunt said.
Last month, the Herald reported that residential building costs rose in the September quarter but remained subdued amid an industry slowdown.
CoreLogic’s Cordell Construction Cost Index recorded a 1.1% rise in the three months to September, reversing a drop of 1.1% in the June quarter.
It was the first time quarterly growth exceeded 1% since December 2022.
But the pace of annual growth remains subdued at 1.3% – the second lowest since late 2013 and well below the long-term average growth rate of 4.3%.
Stats NZ said the number of new homes consented for building fell 22% in the year to July 2024. There were 33,921 new homes consented over that period, down from 43,487 in the 12 months to July 2023.
Levels haven’t been this low since February 2019 when 34,262 new homes were consented on an annual basis.
Westpac senior economist Michael Gordon said the trend in home building remained soft.
“The softness in residential construction reflects tough financial conditions in the building sector,” he said.
Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.
