Page 21 - HW June NEW 2022

“So, if you’re going to have a supply issue, then be upfront and tell us what the issue is.
“If you think you can deliver, then you need to make sure you do deliver because ultimately if you let us down, we’re having to go back to the homeowner and say, ‘I’m sorry, the materials we thought we were going to get in three weeks are going to be in five or six weeks’ and in some cases that is going to push the build out by another three or four weeks.
“So, if I was to say what a merchant could do better, it would be communication and not just at a local level but at a national level.”
After all, Gary Woodhouse says: “These supply challenges aren’t going to be there forever.
“That’s why I think from the merchant’s point of view, they need to think long term and not just try to grab what they can today. “People in this business have long memories,” he underlines.
HALF EMPTY OR HALF FULL?
WHAT’S THE OUTLOOK?
To underline what’s already been detailed above, CoreLogic’s Chief Property Economist Kelvin Davidson is on the record as saying the implications of higher mortgage rates and rising construction costs could potentially mean some homeowners and buyers may forgo or delay new builds, renovations and alterations in the short term.
However, even if building consents do tail off, says Kelvin Davidson, it’s unlikely to lead to an easing of CoreLogic’s Cordell Construction Cost Index (CCCI), which is forecasting further cost increases and ongoing material shortages this year, leading to delays in projects being completed.
Builders will still be busy for some time to come, says Kelvin Davidson, at the same time warning of a possible period of double- digit cost inflation in 2023.
“One implication of the capacity pressures for house building is the time between dwelling consent and completion could increase further.
“Meanwhile, product substitution could continue to become more common too – either costing more for the same quality or downgrading on quality to keep the costs similar.”
With all of these challenges, is there any chance of our 50,000+ consents actually getting built?
Mike Blackburn, in his regular Canterbury Construction Report, says: “The question is, as the market tightens, and the economy shrinks...how many of these forward jobs will get out of the ground?
“I believe that the market will continue to slow down, and the numberofnewdwellingsbeingconsentedwilldropmarkedly compared to last year’s numbers.”
Gary Woodhouse at Landmark Homes is equally forthright: “No, they won’t get built within the two-year time frame.
“There aren’t the materials and there isn’t the labour to do it.
“The other factor is a little bit of consumer uncertainty, what with talk about interest rates and how the housing market is changing.”
The flipside, says Gary Woodhouse with his glass half full: “It is never going to be cheaper to build a home than it is today, because I can just about guarantee that the price increases we’ve seen are not going to come back down.
“Prices won’t continue to climb at the rapid rate they have, but they’re not going to drop back any time soon.”
In terms of people putting off building, Carl Taylor notes a lot of house & land packages being advertised around his Canterbury region.
“You didn’t see that six months ago. Now there are pages and pages and pages and pages of them just sitting there.
“From a consumer’s point of view, it’s all doom and gloom about interest rates and not being able to get your wallboard and building consents taking five months.
“Why would you build?” he asks. “I think a lot of people are shelving their projects – I guess we’ve scared them off.”
Paul Bull and Signature Homes have also noticed a change in
MALCOLM FLEMING (NEW ZEALAND CERTIFIED BUILDERS): “If demand does decrease – and we should be
thinking that it will – that will mirror supply and hopefully reach some sort of equilibrium. That’s the space that we are hopeful to get to with the workload that is in front of us, without putting the industry under the stress it is currently...”
land development, saying: “A number of developers have had sites returned back to them by smaller businesses who can’t or won’t take the risk on land.”
His view on 50,000+ dwelling consents being completed?
“It’s definitely a peak, it’s a record for the country [but] I am almost 100% convinced it’s not sustainable,” he says, evidencing a number of speculative builders, around Auckland especially, who have departed the area once rising costs have left them with nowhere to go on price.
Malcolm Fleming at NZCB says although he has concerns aboutdemandforbuildingfallingaway“toadegree”,thereremains a shortfall in housing availability and, equally, “If demand does decrease – and I think we should be thinking that it will – that will mirror supply and hopefully reach some sort of equilibrium.
“That’s the space that we are hopeful to get to with the workload that is in front of us, without putting the industry under the stress it is currently.
“For goodness sake, we can’t produce enough GIB board – and that is a direct reflection of the sheer level of demand out there.
“These are not normal times!” Indeed.
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JUNE 2022 | NZHJ 19