Pāpāmoa is just one suburb in Tauranga that is experiencing growth in residential and commercial developments. Photo / NZME
One-hundred people registered interest in a Tauranga house and land package and building companies say they are "hellishly busy" as consents hit a new record.
But companies spoken to by the Bay of Plenty Times have expressed serious concerns about future land supply alongside rising material costs and delays in getting goods from overseas.
Calls for the Government to get involved in the supply chain issues are increasing but Building and Construction Minister Poto Williams says while she is aware of reports of materials shortages, "these are unprecedented times".
Tauranga City Council's latest consent figures showed the overall value of consented building work, both commerical and residental, in the year to June hit the $1 billion mark.
Council building services manager Steve Pearce said it was the first time $1b had been reached in that timeframe.
In those 12 months, 2374 building consents had been issued, exceeding the 2227 consents in 2020 valued at $723m and 2299 consents valued at $849m in 2019.
"There has been an increase in the value of consents year-on-year. We did see a slowdown due to Covid, but this has steadily increased since."
The increase had not necessarily been due to a large increase in the number of consents, but rather a rise in their value.
Pearce said it indicated the complexity of building work had risen.
"We have also seen a greater increase in the number of commercial consents compared to residential consents."
Classic Builders director Peter Cooney said demand was so strong this financial year his company would build 300 new dwellings in Tauranga.
The market "is unbelievably busy" but that presented some challenges.
"The biggest challenges we face is the ever-increasing pressure on price for materials and labour. It's hard to predict where the increases will end up by the end of the year with supply constraints."
Cooney was also concerned about where the land supply was going to come from in the next 18 months.
"It's just not there. Rezoning complications are delaying progress with Tauriko so you will see a real shortage looming.
"It's already here but it's going to get worse."
Barrett Homes national sales and marketing manager Lianne Simpkin said contractors were "hellishly busy".
She said Barrett Homes was achieving and exceeding its targets year on year with new builds.
"We have experienced an unprecedented level of inquiry for house and land packages in all areas where we have had house and land packages available."
For example, she said one house and land package had 100 registered interested parties.
"This is not a one-off incident for our packages."
She agreed there were challenges in the building industry at the moment.
"Due to land acquisition delays being experienced locally, Barrett Homes has concentrated its efforts on land acquisition throughout other parts of the country and this equates to a very significant growth strategy for the company."
Regarding the shortage of materials experienced by some building companies, in her view, the "government should be stepping in to help resolve this".
Venture Developments director Mark Fraser-Jones said demand had remained at the level seen post-lockdown.
Sales figures continued to outperform figures from the previous peak back in 2015-2016, he said.
"As with everyone else in the industry, the glitches in the supply chain are due to local and international factors and the increasing costs we are facing, whether through materials, compliance, wages and so on.
"Also the apparent land shortage which shows no signs of abating as land development becomes increasingly difficult and expensive as regulatory hurdles and roadblocks are constantly being erected by local and central government."
ILine Construction commercial director Paul Hammond said this time last year was a lot slower for obvious reasons and it had taken a while for everything to get moving again.
But this year as a whole "is looking like it will be one of our most demanding".
"We have a number of contracts under way at the moment, various different types within the sector we are seeing a big drive on industrial/commercial design and builds along with remedial projects."
Resources were one of the biggest challenges.
"Relationships are the key to this issue, we are lucky that we have good relationships with a number of local key sub trades that continue to perform for us. Without those I'd imagine things would be rather difficult as the industry ramps up."
Williams said the pandemic had disrupted the global supply chain.
"The sector has shown great resilience in working through these issues and government is working with industry to ensure we are helping where we can.
"The Construction Sector Accord has been leading conversations with industry and government agencies on current supply chain issues in the construction sector."
Williams said she would continue to work with the Construction Sector Accord to develop a response to these challenges.
Priority One chief executive Nigel Tutt said the construction sector was the region's largest employer.
"Given current conditions and demand for residential and commercial work, it is no surprise that consents are strong. I expect this sentiment to continue, although labour shortages and land supply might be constraints."
Tauranga City Council city and infrastructure planning manager Andy Mead said the council was "fully aware" of the supply shortage.
The issue of places to build houses and the infrastructure funding required for new growth had also been documented in the Long Term Plan 2021-31, Mead said.
"This is a priority for us to address through planning for new growth areas and also through the provision for more intensification through Plan Change 26 – Housing Choice," he said.
"We aim to notify the plan change to rezone Tauriko West from rural to urban in early-2022.
"Subject to the required planning processes, it is expected that the first houses will start being built around late-2024 or early-2025."
Tauriko West had been lined up by the council as the next urban growth area in Tauranga, as well as planning for Te Tumu, Mead said.
The two areas were part of the sub-region's overall growth approach to providing more greenfield land for housing development to progress.
• The Accord commissioned a survey and respondents identified three key issues.
•These included increases in the price of materials and supplies. Shortages of materials and supplies, particularly structural and non-structural wood products. Shortages of experienced/skilled staff.
• Partnering with industry through the Construction Sector Accord enables us to work together to understand issues facing the sector and work collaboratively to address challenges for the collective good of the system.
- Source Minister for Building and Construction
New Zealand shares ended firmer after Infratil and Spark posted gains.