Will The Building Industry Slow Down In 2017?

Industry, no matter which type you look at, is subject to the ebbs and flows of supply and demand. When world economics are affected by large changes, often demand will wane in certain areas. But when things are ticking along just nicely, demand for industry will build and increase, sometimes exponentially.

This has been the case with the building industry in New Zealand since 2015. There simply is not enough new housing being built to meet the demand or to keep up with the population growth.

Estimated figures of around 30% increase is projected each year in the demand for new buildings to try to keep up. This is likely to extend for the next 6 years minimum.

Because of the large amount of people who have either moved to Auckland for work, immigrants who have arrived searching for a new life, or young people leaving home wanting a place of their own, Auckland’s housing market has been stretched for a couple of years now. Although there has been some quietening felt of late, housing is still difficult to find and at a premium for most folk.

It was estimated that around 13,000 new properties per year would be needed to combat the demand, however in order to keep up a further 7,500 construction apprentices and workers would be needed to keep up and achieve this.

Auckland suffers from a range of limitations when it comes to new builds. With a lack of certified building staff, the quality of new builds has suffered and it has been recognised by the Council that the majority of building inspections have been failed due to companies not having enough skilled builders and mistakes have been creeping in. On top of this, where there are spare sections hiding in Auckland, the process of subdividing can be convoluted and has a large expense. This means that available sections do not come to market as quickly as they are required.

When Auckland amalgamated the borough Councils to become the “Super City” there was a lot of inconsistencies between the staff that were kept by the Council and their understanding of the Building Code. A better approach to building consents and inspections has had to come about. This is no easy task to accomplish in amongst the sky-rocketing demand.

There have been some new areas designated for new builds set aside in Auckland, however the demand is such that the timeline for these areas to be finalised is stretching out past 4 years. To top this off, even when these areas are built, the cost of purchasing these new homes are already well outside what most first home buyers can comfortably afford.

Some of the biggest construction and renovation companies in New Zealand are pushing recruitment drives overseas to try to encourage building contractors to move to New Zealand. Although on the one hand this will provide New Zealand with extra workers, they too will need somewhere to live and will add to the demand in an already booming area.

All good things take time, however time creates demand. It could seem like a never ending circle. However, for firms like Builder Ltd demand helps us thrive. No matter where you are placed in New Zealand one of our teams will have availability to work with you on your project. Yes, we are busy but that is because we have built a name and reputation that people have come to know and trust.

It is unlikely that the building industry will show any signs of slowing down in 2017 if the current demand keeps at the same level as it has been. Don’t let this put you off starting any building project you may have. Builder Ltd have years of experience in project management and building houses in New Zealand and can get your project started and seen through to completion.