Whanganui builders optimistic for 2025 amid economic confidence

Price rises in the construction sector are back to "manageable levels", Anthony O'Leary says. Photo /NZME

Whanganui’s construction sector is gearing up for a busy 2025 as interest rates fall and economic confidence grows.

The Official Cash Rate is expected to be cut by 50 basis points next month and major banks are already offering a range of fixed-term loans with interest rates under 6%.

Master Builders Whanganui president and owner of Hardy Construction, Sam Hardy, said the sector “went a bit quiet” in the middle third of last year but inquiries were picking up, especially straight after Christmas.

“I’ve talked to a few architects and designers in town and they were busy in the last quarter of 2024, which means plans will be going into council,” he said.

Whanganui District Council received 846 building and Clause 2 Exemption applications in 2024, a reduction of 3.2% (874 applications) from 2023.

Hardy said pricing and supply chain issues, significantly impacted during the height of the Covid-19 pandemic, had levelled out.

Rising costs hit projects across Whanganui over the past few years, with the recently reopened Sarjeant Gallery costing more than $70 million.

In 2020, it was expected to cost $49.3m.

Sam Hardy says inquiries have picked up, especially straight after Christmas. Photo / NZME

Stonewood Homes Whanganui director Anthony O’Leary said prices always rose but, before the pandemic, it was 2% or 5%, with reasonable notification time.

“We are back to those manageable levels and it’s something you can factor into the equation – business as usual,” he said.

However, the national economy was still in the early days of turning a corner.

“Some people were picking that interest rates would be enough to trigger a spike in noticeable growth in the construction sector,” O’Leary said.

“Yes, that’s helping, but the general economic outlook isn’t as good as it could be in terms of climbing out of the recession.”

He said nationally there were still concerns about job security, and retail and hospitality needed to bounce back.

“The outlook is positive but there’s work to get to the ‘thrive in ’25′ status.

“I’m hoping that will be a bit more realistic later on in the year.”

The council aims to bring in $600,000 in development contributions in the 2024/25 financial year but as of October 31, only $29,152 had been received.

A new contributions policy, which moves from a site-based to an occupancy-based measure, took effect on July 1 last year.

The council collected only about $18,000 in 2022/23.

Speaking at a council meeting last month, chief executive David Langford said the number was lagging behind the target but more than $100,000 of development contributions were due.

“They just haven’t hit that stage of their development where they are due to actually make the payment,” he said.

“It’s reassuring to see a pipeline of income developing, even if it hasn’t hit the council’s bank account yet.”

O’Leary said the new policy was not making housing more affordable but it would “become the new norm”.

“It is what it is, its policy that’s been voted in by the council.”

Trident Homes Whanganui owner Matt Perks said he expected to see the new policy’s effects later this year or in 2026.

“Land was hard for people to sell over 2024 so people had already done their subdivisions or had their resource consents approved,” he said.

“It could be the mum and dad developers feeling the effect now.”

Speaking to district councillors last May, Perks proposed a $10,000 flat fee per new unit – charged at the building consent stage – to provide a clearer and more predictable cost to developers and home buyers.

Matt Perks (left) with fellow Trident Homes franchisee Tim Smith. Photo / NZME

He said Trident had a successful 2024, with 17 homes sold.

“Prices have held and a couple have actually dropped,” he said.

“Consistency is the key for any business – knowing that what we’re pricing at is going to be consistent through the job – and we’ve got that now.

“That gives confidence to our clients and ourselves.”

O’Leary said when the company was not “run off our feet” it was a good time to prepare.

“That’s upskilling, making sure our systems are in place, making sure we have all the knowledge to help our prospective clients,” he said.

“We are picking things to get busy over the next 12 months.”

Hardy said he kept a close eye on the annual Apprentice of the Year competition, an event he judged at a regional level last year.

“There were good enrolments from both guys and girls and there’s no shortage of inquiries from young fellas looking at getting into the trade.

“A lot of great things are happening in town – the Sarjeant’s opened, the port is being developed and good blocks of land are opening up around the place.”

Mike Tweed is a multimedia journalist at the Whanganui Chronicle. Since starting in March 2020, he has dabbled in everything from sport to music. At present his focus is local government, primarily the Whanganui District Council.