The Star: February 15, 2024

Thursday February 15 2024 The Star
Latest Canterbury news at starnews.co.nz
NEWS 5
Belt tightening for building industry
• From page 1
Mike
Blackburn, an
advisor to the
construction
industry who
produces a
monthly analysis
of building
consent trends
nationwide, said
Mike
Blackburn
the number of consents was in
decline.
There were 3508 consents issued
for residential dwellings in
Christchurch during 2023, a 23.5
per cent decrease on 2022.
The reduction in the Selwyn
district was more severe with
1154 dwellings consented in
2023, a 35.8 per cent drop on the
previous year.
Blackburn said the fall was not
unexpected and the diminished
activity was relative.
“It’s not like the arse has fallen
out of the market. What’s happened
is 2021 and 2022 were
absolute all-time record highs as
far as construction goes,” he said.
“I’ve been banging the drum
for 18 months now that building
consent numbers were going to
come back partly due to overbuilding
and economic effects.
“In January 2022, the phones
stopped ringing for most residential
builders in New Zealand
and the reason construction
numbers continued to climb is
because anything sold (in 2021),
you won’t be pouring concrete
for the foundations for at least
another 12 months.
“Whilst 2022 was still a relatively
good year, we didn’t really
start to see a decline in building
consent numbers until the beginning
of last year.”
Hamilton, who specialises in
renovations, noticed a decrease
in new build activity before
Christmas.
“There’s still work out there
but everyone’s scrapping over it.
It’s definitely a belt tightening
situation for everyone.
“We heard through the group
housing side of things that
people weren’t going into show
homes, it was just unaffordable
to build.
“We’ve really got to sort out
how to do it cheaper while still
maintaining quality.”
Hamilton urged the Government
to implement a predetermined
approach to safeguard the
industry during lean times.
“We’ve talked about it in depth
at (Master Builders) national
level . . . trying to co-ordinate
with government spending so
when there’s a quiet spell it’s an
easy transition to pick up infrastructural
type work, schools or
housing projects so you can plan
as a company,” he said.
Asked if he was aware of
any of the 360 members of his
branch involuntarily downing
tools, Hamilton said: “There’s
READY AND
WAITING:
Vacant
sections await
construction in
a Christchurch
subdivision.
PHOTO: CHRIS
BARCLAY
definitely a little bit of pain going
on out there.
“Everyone is looking in rather
than out at the moment asking
themselves: How can we just get
through this?
Hamilton said builders were
often turning to his forte, renovations.
“It’s not that easy to pivot when
you’re set up for certain types
of building but you’ve seen guys
jumping into other areas and undercutting
other guys,” he said.
He noticed homeowners were
now more likely to work on their
existing property than start
afresh.
“If it gets busy it means people
aren’t buying new. They’ll do the
bathroom and kitchen because
they can’t build now.
“It’s huge money to build
just a basic home in Rolleston,
you’re getting close to a million
(dollars) now. That’s a lot for a
first home buyer who’s never
experienced a 9 per cent (interest
rate) before.”
Like Blackburn, Hamilton is
not surprised by the downturn,
and acknowledges it is part and
parcel of building in a fluctuating
economy.
“We’ve had Covid, supply
shortages, high interest rates. It’s
a game that’s always got something
trying to make you exit
early,” he said.
“When interest rates started
going up you didn’t need a crystal
ball to know what was going
to happen. Everyone is feeling it
. . . retailers, the available spend
has just gone out the window.”
Hamilton expected the tough
times to continue, predicting
interest rates would curb borrowing
for the foreseeable future.
“I don’t think they’ll move up
and down that much, maybe
one or two per cent so this is
going to be the new reality for
people over the next couple of
years. You’re not going to see 2-3
(per cent, interest rates) again for
a long time.”
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