Builder shortage leads to big backlog

Builders are in such desperately short supply that more than 100,000 houses are waiting for repair, extension or renovation work.

And many homeowners are being forced to abandon their renovation dream and sell up for a better place.

Registered Master Builders Federation chief executive Pieter Burghout said the country's 55,000 builders could not meet unprecedented demand for additions, alterations or repairs, which they had rejected for much of this decade, resulting in a huge backlog.

The five-year building boom meant up to 100,000 homes awaited renovations, although Burghout said it was impossible to calculate numbers exactly.

His comments come as Statistics New Zealand data yesterday showed the building industry remained strong, despite the slowing economy.

The value of building work put in place - that is, completed building - was $2.95 billion, some 10 per cent higher than a year ago.

Residential building was up 2.6 per cent while non-residential construction was up 22.4 per cent.

"What slowdown in construction?" asked Goldman Sachs JBWere after the data was released.

The brokerage said the data showed "yet again surprisingly strong residential construction activity and a surge in non-residential building construction".

The surge in non-residential construction over the March quarter could in part have been due to the construction of Sylvia Park, the country's largest shopping mall, which opened in Auckland this week.

Residential construction was likely to decline over the next quarter but non-residential building would remain strong.

Bank of New Zealand economist Tony Alexander said some British migrants had found it impossible to get a builder, eventually buying another house, sometimes just a few months after the initial purchase.

"It's something I've picked up in the past few months, particularly with English migrants who are contributing to the churn factor in the real estate market," Alexander said.

Statistics found construction work running at steep levels. Despite predictions of a slowdown, the seasonally-adjusted value of all building work completed in the March quarter was $3 billion, up $267 million or 10 per cent on the same quarter last year. The value of work on a non-seasonally adjusted basis was $3.3 billion.

And Alexander does not expect the building boom to slow down for at least two years.

"We expect levels of construction activity to slow down eventually, but this is consistent with what we have been saying about a soft rather than a hard landing," he said.

"People are still wanting to build houses."

Building firms were also "labour hoarding", retaining staff in the face of any predicted slowdown.

They knew skilled tradespeople were hard to replace so they kept them, preferring to reduce margins if they hit a slow patch.

Fletcher Residential general manager David Halsey said demand was so strong that his firm was building at Wattle Cove in Manukau, Manurewa, Botany, Albany and Greenhithe on the North Shore and at St Johns in the former Winstones quarry.

Fletchers was selling homes for $460,000 to $800,000 and prices were rising more than 5 per cent annually but labour was not short.