Homeowners hoping to hire a builder or tradie in the coming months could be in for a shock.
Experts have warned that rising costs, supply chain delays and a spike in building projects have all put pressure on the construction industry and contributed to longer wait times.
CoreLogic head of research Nick Goodall says there is a growing backlog of new builds, with consents for new dwellings rising to just over 50,000 in the 12 months to the end of March, well above the 30,000 to 35,000 houses that New Zealand’s construction industry has capacity to build annually.
Government regulations have been driving the push for new homes, with first home buyers able to take advantage of lower loan-to-value ratio requirements and KiwiSaver sweeteners and investors able to claim tax advantages with new builds.
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“If a builder is willing and able, there are going to be plenty of jobs for them in the next two years,” Goodall says.
“There's a strong pipeline of properties that need to be built. But there are serious questions about whether the building industry can reach that capacity anyway with the cost [and availability] of labour and the cost of materials constraining the market.”
The same can be said for related tradespeople, such as electricians and plumbers, needed for domestic building work.
That’s just new homes. New Zealanders who want major work done on existing homes could face even lengthier wait times. “Kiwis better be good at DIY because it’s kind of hard to get a builder already,” Goodall says.
CoreLogic head research Nick Goodall says there is a growing backlog of new builds. Photo / Supplied
However, supply chain issues could work in the favour of those with smaller jobs. Jeremy Gray, marketing manager at tradie marketplace Builderscrack, says: “A lot of complex renovations and new builds are being organised around the availability of materials. Certain builders will still be able to get [smaller] jobs done in and around other work that may be delayed due to supply issues."
Malcolm Fleming, chief executive of New Zealand Certified Builders, says there are some potential headwinds facing the construction industry. Rising interest rates and inflation are reducing people’s ability to borrow and pay for building work. Fleming says drop-off in demand could ease pressures. That should mean good builders could become more readily available for work.
If building businesses fail, however, homeowners will face another barrier to finding tradies. Fleming is “certainly hoping” that the difficulties from supply chain restraints, recruitment and falling demand will not drive builders out of business, but Kiwibank chief economist Jared Kerr is not so sure.
“It’s an uncertain time. There could be a few more builders go to the wall [this year]. We've heard of a number of anecdotes of builders struggling with the blowout and costs and ability to find labour. It is a tough period right now,” Kerr says.
“But I think, looking through the next few years, there are still thousands of homes that need to be built in order to balance the housing market. So, there should be plenty of work in the pipeline for the for the industry as a whole.”
Even though the larger builders will likely be tied up with large scale home building, smaller builders should become available, he says.
Kiwibank chief economist Jared Kerr: “There could be a few more builders go to the wall.” Photo / Supplied
But at the same time Kerr also expects to see demand drop in the smaller job space. “I could imagine that as the housing market slows as it is now, people will be less inclined or less keen on renovating. Plus, we did a lot of DIY, and projects around the home over the last couple of years. Maybe that's coming to an end.”
Homeowners post jobs on Builderscrack that tradies then chase, if they need work. Gray has seen significant change in tradie availability for those smaller jobs over the past couple of months. Pre-Covid, typically less than 8.5% of jobs posted on Builderscrack attracted no interest. That jumped as high as 15% early this year when demand for tradies was peaking both on and off the platform.
“The pressure may come off a bit in the months to come, but we're expecting to see a long tail of demand from people who have held off undertaking improvements due to the perceived low availability of tradespeople.”
Builderscrack monitors which trades are most in demand. In April, gasfitters topped the list, followed by flooring, cladding, roofing and bricklaying tradespeople. The least in demand were electricians, followed by those dealing in painting/decorating, plastering, excavation and plumbing.
