The Constructive NZ Construction Forum panelists talk business yesterday in Rotorua. Photo / Carmen Hall
Compliance costs that have jumped by $20,000 to $50,000, diminishing workloads of up to 30 per cent, delays and building material prices that have risen nearly 20 per cent.
These were among issues discussed at the Constructive NZ Construction Forum in Rotorua yesterday, led by the Master Builders Association.
A panel of leaders with expertise in residential building, infrastructure and the economy addressed some tough questions from a packed audience from throughout the country about past and future industry challenges.
Property Council New Zealand chief executive Leonie Freeman said, in her view, ''we have got the people, the companies and the expertise to solve the housing crisis''.
Master Builders chief executive David Kelly acknowledged constraints in the supply chain, which had caused big delays, with one report showing construction inflation was at 18 per cent.
''The cost is the delay and it's going into the cost of construction. So I think some individual businesses work that out really well and understand it.
''For some, I think there is a bit of an iceberg under there, they haven't been making money and they are struggling. That is the whole point of this [forum], to actually think about 'do you understand what is actually going on in your business and can you project that is going to happen'.''
Master of Ceremonies Jehan Casinader told the panellists the top question was how Kiwibank said this week that New Zealand would have an oversupply of housing within a year and what they thought of that.
Te Waihanga Infrastructure Commission chief executive Ross Copland said, in his opinion: ''It was one of the more ridiculous things I have read all year."
New Zealand was the sixth least-affordable country in the world for housing, he said.
''We just published the 30-year infrastructure strategy that said we are 114,000 residential units short right now. So that's like a backlog infrastructure deficit, housing, whatever you want to call it.
''That will take some time to resolve, that's the homes where you are still living with mum and dad instead of going out and getting a flat and we are so far short of where we need to be.''
Copland said the building community needed to keep up the good work.
''There is a hell of a lot of housing that needs to be developed.''
CoreLogic chief property economist Kelvin Davidson said he estimated of the 55,000 building consents issued last year only about 30,000 to 35,000 had been finished.
''I think it's important to acknowledge that the consents that pass through to actual housing is not 100 per cent. Some of those dwelling consents won't reach completion, and probably a higher rate at the moment will just never see the light of day.''
Jennian Homes managing director Simon Barber said the company had seen some of its workloads drop 30 per cent and materials increase 20 per cent.
''And then we have got declining volumes going into the market. We are right-sizing our workforces, some of us have been here before in the share market crash and the Global Financial Crisis.
''We have seen it before and early intervention is the key, you can't just wait around and let the change wash over you, you have to be in the middle of a change.''
The Property Council's Freeman said the organisation had been working with the Government for the past 18 months on the build-to-rent bill.
The properties were generally developed and professionally managed by institutional investors, developers or community housing providers to provide long-term rental accommodation.
''We think this is going to be a gamechanger. If we got that legislation passed they have got projects lines up to add another 25,000 homes in the next few years.''
Freeman said it was positive.
''Often when the market is cyclical the bigger owners and developers will have a much longer view of things and will also build through the cycle. So I'm really hopeful that this will bring another new dimension to New Zealand housing in the construction industry.''
Building and Construction Minister Megan Woods addressed the forum and wanted to ''thank you all for your work in the building and construction sector''.
Woods said the task force where she worked alongside Kelly from the Master Builders Association was a great example of industry and government working together to help address a critical supply shortage.
''I'm pleased to say we're already seeing positive change. Hopefully, the sector will see it as a sign of my commitment to listening to your voices and working through problems when they arrive as quickly as we can.''
In the past five years, the Government had built about 7000 new houses and there had been a dire mismatch between population growth and new housing.
''Since 2013, Rotorua experienced a population surge of 9000 people while only issuing 1500 building consents. About 300 homes are under construction or being planned and out of the 10,000 new public homes 209 of those have already been built in Rotorua.''
Questions put to the minister included the Gib shortage, housing affordability and Kiwibuild.
She said she initially thought the law needed to change around Gib, but had found it did not.
''We just needed really clear guidance around how to do product substitutions and to make sure there would be consent authorities brought into that. The work we need to do is more medium than long term and some of that will be done through the Commerce Commission.''
Housing affordability had been improved by raising first-home grant house price caps, which allow KiwiSaver contributors up to $10,000 towards a deposit on their first home.
Newly elected Master Builders national president Johnny Calley, from Calley Homes in Tauranga, told NZME sales were lower than they had been but there was still huge demand.
''At the moment, there's a period of resetting and an adjustment to the financial settings, which are more challenging because of all the other issues around the cost of living, interest rates and inflation.
''Once the economy settles there is an expectation sales will naturally increase again, we just don't know when that will happen.''
However, Calley said there was definitely optimism that the market would respond and rebound.
NZME spoke to building company owners who attended the national forum and asked how challenging the past 12 months were and how confident they were heading into the future.
Shane Lye, Genx Homes BOP
''It's been product procurement as all our jobs run to a certain timeline. It's getting the products when we need them without having excessive delays and having to reallocate your status to another job because we're waiting on products. To be honest with Covid we are operating at about 70 to 80 per cent and we are definitely not as productive as we should be. I am a pretty positive person but we have seen a drop-off in the phones ringing and demand. We have just got to be proactive and keep moving forward.''
Luke MacGibbon, Ninety Degrees, Tauranga
''The past 12 months have been really busy for us. When Covid first hit we lost quite a few big contracts but we worked hard to secure new contracts. My wife and I started the business about six and a half years ago in high-end residential. We have about 15 months work ahead of us so we are good. But it is looking forward and beyond that for us at the moment.''
Dylan Oswald, Oswald Construction, Rotorua
''We have been busy but struggled with supply chain issues just like everyone else. It's been all about trying to forward think and being able to order as much as you can. I think some of it also comes down to having a good name. Inquiries are down for new builds but we have had a bit of inquiry for renovations and extensions. We're having positive thinking... it's hard to know at the moment.''
Tony Pexton, T.P Builders Auckland
''Supply across the board has slowed things down and that has meant we haven't been able to meet some of our targets. House prices have increased by at least 25 per cent and there is no doubt Covid has had an impact. We build generally high-end homes and big renovations; we are not big but we have been in the game for 35 years. However, I have noticed we have less projects. My inquiry has been down but I have a couple of big projects about to start. I have been feeling nervous but now I am a bit more buoyant.''
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