Step aside COVID19, there’s a new c-word in the spotlight.
From skyrocketing material prices, to supply chain disruption and labour shortages, the challenges of construction are weighing heavily on the minds of not only those in the industry – but homeowners looking to build, and cities that are in desperate need for more housing.
So what will 2022 bring for this industry under pressure, and more importantly, is there a way out?
Construction in New Zealand is at an all-time high, which has certainly amplified the number of problems being experienced right now, and Graham Burke, Executive Director of the New Zealand Construction Industry Council (NZCIC) says the pandemic has played a significant part in the issues faced.
“Yes, we are currently faced with increasing material costs however, this is an international phenomenon and beyond the control of the New Zealand industry. Of course, the labour market is also incredibly tight and while skills shortages are not new, the closed borders have had an effect on the availability of labour from overseas.”
But what’s driving this high demand for construction? Burke says that it is a combination of factors, including the significant infrastructure deficit, housing shortages and consumer demand, compounded by rising house prices which give homeowners more equity and record low interest rates. And with a very strong, forward pipeline of work, there’s unlikely to be any significant changes to the status quo in 2022.
David Kelly, Chief Executive of the Master Builders Association, says that while we have been dealing with these issues for some time, they were further exasperated by last year’s lockdown in Auckland.
“This disruption has created unpredictable and rising material costs. It is currently very difficult to determine exactly how much a build will cost. Some products increased two- or three-times last year – no one can predict this.”
And skilled labour shortages certainly haven’t helped things along. “The construction industry needs more experienced people across a range of specialised areas. We currently don’t have enough people to deliver the houses and critical infrastructure that New Zealand needs,” says Kelly.
Unfortunately, Burke says these conditions are set to continue – so looking to the year ahead and beyond, is there any way out of the corner we’ve been backed into?
“Thanks to the Apprentice Boost scheme we have seen a record number of apprentice sign ups which is fantastic however, this will take some time to flow through in terms of lifting productivity as it takes some years to become a fully productive tradesperson. The industry also has large numbers of workers nearing retirement age.”
He is quick to point out that recruiting more people alone won’t be the only fix required. Lifting productivity through upskilling and looking to new methods of construction – such as prefabrication and more off-site construction – are two other possible solutions for the construction crisis.
Kelly knows that right now is a tricky time for builders and their customers, especially when it comes to material availability. And he says that communication is more important than ever.
“Homeowners need to talk openly about their budget, then all parties can manage the project to deliver the best possible home within the budget available. Builders will need to consult with their clients on using different products, and it is also important to have an allowance for contingencies, which your builder can help you determine.”
And Burke agrees – don’t be put off building a new home, just make sure you plan ahead.
“People considering building should contact a building professional in the first instance. While there are long wait times for projects just now, there is still a lot that can be done to find the right designer, builder and so on.”