Property chief shocked by Canterbury building liquidations

A rush of building company liquidations has hit Canterbury.

A Christchurch-based property chief expressed shock at the scale of Canterbury building company liquidations but says it shows problems with the sector.

John Hare, chief executive of Holmes Group and the former principal engineering adviser to the Canterbury Earthquake Recovery Authority, said the scale of collapses took him aback but he was well aware of the issues.

"I must admit, the numbers surprised me but I'm not surprised it's happening," Hare said.

He was reacting to a Stuff report today on sector failures.

"More than 60 construction-related Christchurch companies have been liquidated this year, owing creditors an estimated $40 million. Analysis of hundreds of insolvency records found about 160 companies in the building industry registered in Canterbury have gone bust since January 2015. The building industry's woes have been well-publicised, with the collapse of firms including Stonewood Homes, H & R Garlick, Goodlife Homes and Urban Construction," Stuff reported.

Hare said he knew of the issues.

"We had earthquakes and suddenly it became a goldrush and to be a contractor you only needed to have a ute and a dog, as the saying goes. A number of people saw an opportunity, thought they could go into business and 'it's great, there's EQC funding and it's a gravy train'."

"Maybe it was, maybe it wasn't. They did slap-dash work and got called back three times and they had mountains of work. Tradesmen were driving all over town with nothing getting finished and it just became an escalating cycle," Hare said.

The scale of repairs to more than 65,000 residences was unprecedented in New Zealand, he said, "in a city without the capability for that."

Ivan Stanicich, Canterbury Registered Master Builders president, said he was not surprised by the scale of liquidations Stuff had reported.

"Not at all. It's just a numbers game. The more work you do, the more problems you have. The issue is more the boom-bust cycle. I've been in the business 36 years and we've continually had boom-bust cycles," Stanicich said, warning that Auckland could suffer the same fate in time.

He called for better training and more skills to smooth the cycles.

Demand in Canterbury had been too high "and the supply of quality labour too low. Master Builders has been concerned about this for several years. It's very hard to upscale quickly to cope. You can't do it," Stanicich said.

Commerce and Consumer Affairs Minister Paul Goldsmith this month issued the first part of an insolvency law review, including measures to address issues around voluntary liquidations.

Insolvency practitioners were under-regulated, that document said, recommended a new licensing body be formed and that companies or shareholders should not be able to appoint liquidators.