KEY POINTS:
The $12 billion construction sector is responding to an economic hammering by offering discount packages that cut the cost of building a new home by as much as 45 per cent.
Pieter Burghout, chief executive of the Registered Master Builders Federation, said two house builders were already offering low cost packages to tempt buyers.
National house builder Milestone Homes will build a new place for just $895 per square metre including carpet, tiles and GST. Houses can cost up to $1600 per sq m. Costs on larger commercial projects are at least $1800-$2000 per sq m.
Burghout said the discount prices meant a three-bedroom, 120sq m house would cost just over $100,000.
Add to that a section of around the same price in an outer Auckland suburb and a new house package could cost just over $200,000.
The Tauranga-headquartered Milestone builds low-maintenance homes with a seven-year Master Builders Guarantee in either brick or weatherboard cladding with a metal tiled roof.
Burghout said Stonewood Homes, which is headquartered in Christchurch but has builders around New Zealand, was offering new house and land packages from $298,000.
"Builders are responding pretty aggressively," Burghout said.
Of the $12 billion poured into building annually, $7.5 billion is spent on housing and $4.5 billion goes into commercial work. The federation's industry outlook expects dollar values to remain static until at least 2010.
The Government has proposed new housing-affordability legislation to force developers to offer a component of cheap housing in large new estates.
But Burghout said the federation's stance had always been that the market would respond to the need for more low-cost housing. The Milestone and Stonewood packages were clear evidence of that.
Building consent data from Statistics New Zealand show 25,000 new houses were built in the year to April, but Burghout said the federation had anticipated this would be running at just 23,000 to 24,000 new houses by then because members were making it clear that the sector had slowed.
Fletcher Building is picked to suffer from softer domestic building conditions and its shares closed yesterday at $7.66, down from an annual high of $11.51.
The BNZ has reported dire comments from the building sector in its latest confidence survey.
"The construction industry is looking bleak," said one builder. "Busy short-term, not so much looking forward," said another.
All residential building companies had cancelled work and were laying off staff, a respondent said. Many builders were searching for work, established and successful operators had no work, but infrastructure projects werestill strong, the report said.
The survey, sent to 14,000 people, asks for responses about many sectors of the economy, but the BNZ said feedback from construction showed work was tightening up and builders were busy hunting for new jobs.
Throughout this decade builders have been in such short supply that clients sometimes had to wait more than a year. Shortages of sub-tradespeople, particularly in the painting and plastering areas, also looks to be easing.
A painter-decorator told the survey most firms' workloads were very slow, and a building industry consultant was applying for work overseas.
BUILDING BLOCKS
* $6 billion was spent on construction in 2001.
* Now, around $12 billion is spent annually.
* Three-quarters of that goes into housing.
* The remainder is commercial work.
