Go Local! Building firms mixed over health of industry as building consents drop

Bella Homes director Simon Crawford said though there were delays in getting materials, the transition down the alert levels was "pretty good". Photo / Michael Cunningham

Tough Covid-19 restrictions have caused a slump in residential building consents and caused delivery delays and supply backlogs the region.

While some Northland building firms are uncertain about future, industry experts are confident the sector will quickly bounce back, saying "there's never been a better time to build".

The latest figures from Statistics NZ show there were 1025 residential building consents issued in Northland in the year ending April 2020, compared to 1104 for the previous 12 months - a 7 per cent decrease.

Kaipara saw the biggest drop with 163 residential consents issued in the year ending April 2020 dropping from 195 the previous year – a 16.4 per cent slump.

Whangārei was down 8 per cent, with 582 consents falling to 534 over the same period.

The Far North was the least affected, with 327 consents issued in the year ending April 2019 rising to 328 this April.

Registered Master Builders Association national president, Darrell Trigg, who is based in Whangārei, said a 7 per cent drop "isn't too bad in the bigger scheme of things".

Registered Master Builders Association national president, Darrell Trigg said a 7 per cent drop in Northland building consents 'isn't too bad in the scheme of things'. Photo / Supplied

The construction industry is worth around $42b a year, he said, with 25 per cent roading, 25 per cent commercial and 50 per cent residential.

"Of that, a large chunk of it are mum and dads building houses and baches," Trigg said.

"Where you'll find a drop in residential, it's probably people in tourism or hospitality. If you're working for Air New Zealand and were building a house, you'd be putting that on hold for now.

"But there's never been a better time in New Zealand to build because money is cheaper to borrow and a lot of suppliers want to get back money lost from the Covid lockdown so they're offering deals."

Trigg said there is some uncertainty around those working in struggling sectors whose jobs are on the line.

The biggest challenges facing the industry right now is a skills shortage – but the Government focus on the regions has been positive and the work is still there, he said.

"Northland post-Covid is in a really good position to bounce back quicker than some other regions. Under this Government the provinces have been in a better position to thrive."

However, figures for the month of April paint a different picture, with the number of new Northland homes consented in April dropping 33 per cent from the previous year.

In New Zealand, building consents dropped 17 per cent over the same period - the biggest percentage fall in monthly consents compared with the same month in the previous year since July 2011.

Statistics NZ acting construction indicators manager Dave Adair said the decrease is due to a range of factors.

Simon Crawford has had one client who's had to rethink the budget and downsize his project after taking a pay cut due to Covid-19. Photo / Michael Cunningham

These include the direct impact of Covid-19 on plans to build, as well as any changes to how consents were lodged and processed by councils during the lockdown, he said.

"Ultimately, there is still a large amount of uncertainty around the implications of Covid-19 on the future supply of homes," Adair said.

"Typically, many homes are built within about a year of gaining consent, but these are unusual times and it will take some time to see if existing consented projects are completed or delayed."

New Zealand was in alert level 4 from March 25 until almost the end of April, with the closure of non-essential businesses, including construction sites.

Those working in construction, manufacturing and forestry were among the first to get back to work on April 27 under level 3, as long as staff followed strict social distancing rules and good hygiene practices.

Whangārei-based Bella Homes director Simon Crawford said the transition down the alert levels was "pretty good" and he expects the industry to bounce back quickly.

"When level 3 was announced everyone was getting back on the job at the same time and with restrictions, we had to manage that a bit.

"Getting stock from A to B has been a bit harder as couriers and trucking firms are under the pump to get materials to us.

"It's not the end of the world, we've just got to be patient and it's only waiting an extra day or two."

The number of new Northland homes consented in April dropped 33 per cent from the previous year. Photo / File

Crawford said he's had one client who's had to "rethink the budget" after taking a pay cut due to Covid-19 but they were still going ahead with the build.

"They had to downscale a bit, but nothing has been cancelled."

ITM Whangārei owner Shayne Heape said his branch has been busy since the move down to level 3, but he was "realistic" about the ongoing effects of the virus.

Immediately after lockdown it was difficult getting stock out of Auckland "partly because of the number of orders suppliers had received and trucking firms getting orders to us", he said.

"We're doing well customer wise, there's no slow-down in demand," he said.

"We're expecting things to go well for the next month or two, but I don't know outside of that.

"There's so much that's unknown going forward. We don't know what the economy is going to do."

Bay Builders director Bevin MacCarthy was concerned about supply problems and material shortages when he last spoke to the Northern Advocate.

While it was more difficult getting materials under level 3 – because of having to pre-order materials and arrange times to pick them up – it has been better than expected, he said.

"It's going pretty good," MacCarthy said.

"We've got plenty ahead of us now and the restrictions we thought may happen didn't really affect us too much.

"It's not all doom and gloom."

Registered Master Builders Association national president Darrell Trigg said Northland is in a good position to bounce back quicker than some other regions post Covid. Photo / Michael Cunningham

Trigg welcomed changes to the Building Act, announced recently by Building and Construction Minister Jenny Salesa.

From August Kiwis will no longer need council building consents for single-storey detached buildings of up to 30sq m such as sleep outs and sheds, as well as greenhouses, carports, barns and other ''low-risk'' structures.

The changes are expected to save New Zealanders $18 million a year in consent fees and free up councils to focus on high-risk activities. However, building work must still meet the Building Code.

"I think it's absolutely fantastic, it's freeing up money and time for people," Trigg said.

"It was tying down councils with unnecessary processes for tiny buildings. For some jobs the cost of consent was outweighing the cost of the work."

Heape was also pleased with the amount of commercial work coming up.

Another $3 billion was announced for infrastructure in the May 14 Budget as the Government seeks out "shovel-ready" projects to keep the economy going. This is on top of the $12b allocated in January.

"That's looking positive," Heape said.

"It's going to take a while for residential to pick up again but with interest rates so low people will take the plunge.

"Early summer will really be the testing time for residential for Northland. That's the biggest lift in general sales for houses plus new builds. As soon as summer hits everything is just rock and roll."