Warning fall in new house builds may
The biggest challenge for Venture Developments as a company was working on new ways to keep the price of a new build affordable, he said.
“This means constant innovation in the type of housing we can offer to the market.
“Expect to see more terrace townhouse developments, as land scarcity continues to be a big issue in this region.”
New Zealand Certified Builders Association chief executive Malcolm Fleming said inquiries for new builds or alterations and additions in the small to medium residential market had dropped about 20 per cent from a year ago.
Forward workloads were resembling pre-covid levels. However, members were reporting an estimated 20 per cent of residential projects booked in for 2023 had been rescoped to make them more affordable.
“This is due to increased interest rates impacting on the amount a homeowner can borrow, in combination with the rise in building costs that occurred last year.”
The challenge for 2023 was to ensure builders had a good forward pipeline of work and could retain margins to keep their skilled workers.
“The industry is particularly focused on the latter point, with memories still fresh of the medium to longterm consequences of letting talented people go — they are very difficult to replace.”
Firms resizing was more acute in the commercial build, group home build and apartment development markets compared to the small to medium residential build market.
Fleming said some developments were being put on hold as commercial and industrial building tenants, along with purchasers of spec homes and apartments, withdrew from the market. “One possible outcome is that builders contracting to developers who no longer have a forward pipeline of work may choose to transition to the small to medium-sized housing market, rather than exit the industry.”
Recessions were not good for any industry, he said.
“For construction, there will be a focus on builders differentiating their service offer from their peers.
“This will be beneficial to qualified builders versus unqualified builders.
“Homeowners now faced with builder options will generally select a qualified builder over one who isn’t trade-qualified.
“This will have a positive impact on the quality level of building work undertaken.”
David Kelly from Master Builders said it was tricky to predict what the remainder of the year would look like.