dwelling consents

PHOTO: The statistics from Stats NZ revealed a 20% decline in new home consents in the June quarter

A recent survey conducted by Master Builders has unveiled concerns within the construction industry. Of the builders surveyed, half reported a decrease in their work pipelines, prompting apprehension about the sector’s future.

According to the annual State of the Sector survey, 66% of respondents believed that the economic downturn was far from over and anticipated further challenges. While 52% mentioned having a stable or robust work pipeline ahead, 48% indicated a decline in incoming projects, with 12% describing this reduction as critical.

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The statistics from Stats NZ revealed a 20% decline in new home consents in the June quarter compared to the same period the previous year, marking the lowest level since June 2020.

David Kelly, the CEO of Master Builders, expressed concern about the strain on building firms, which have been grappling with a demanding market to find sufficient demand. He remarked on the industry’s turbulent journey over the past year, leaving many feeling cautious.

Kelly emphasized the unsustainability of these boom-and-bust cycles, which disproportionately affect the construction sector. He noted that this cyclical pattern leads to the loss of valuable experience, talent, and businesses.

Despite these challenges, Kelly found encouragement in the fact that some builders still enjoyed a consistent workflow. However, he acknowledged that they had to adapt by reducing costs, focusing on sales and marketing, and exploring new markets such as renovation projects.

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The survey, based on responses from over 1,000 builders and recent homeowners, also highlighted key industry concerns. Rising construction costs remained the foremost concern for 88% of respondents, although CoreLogic’s latest index indicated that inflation was stabilizing. Finance was a significant worry for 83% of participants, driven by high inflation and interest rates, which made potential homebuilders more cautious.

The government’s support mechanisms were acknowledged, but Kelly advocated for their extension to aid the construction sector through the current economic cycle. The survey also pointed out other major issues: government regulation (65%) and council consent processes (50%).

Supply chain issues, once a top concern at 95%, had eased to 34%. The Resource Management Act and proposed reforms, as well as procurement issues, were also raised in the survey.

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While 48% reported being able to bring in the skilled workers they needed, an improvement from 9% the previous year, finding skilled labor remained a pressing issue, dating back to 2016 in survey findings.

Additionally, nearly two-thirds of respondents hired apprentices, with nearly half citing the Government’s Apprenticeship Boost Scheme as a contributing factor in their decision to do so.

SOURCE: STUFF