Two thirds of builders are seeing less demand for their services compared to the same time last year, according to the latest EBOSS Builder Sentiment Report.
The survey also says 38% are noticing an increase in the number of projects being put on hold, with 34% noting an increase in project cancellations.
The report is funded by the BRANZ Building Research Levy and is based on a survey over more than 650 NZ building firms.
It found that on average, building firms are operating at just 67% of capacity, down from a peak of 83% in 2022.
Worryingly, the number of building firms operating at 0% to 49% of capacity has more than quadrupled over the last two years, rising from 5% in 2022 to 21% in 2024.
The outlook is also grim, with 70% of the builders surveyed indicating they believe industry conditions will continue to decline over the next 12 months.
"Smaller businesses in particular are doing it tough," EBOSS Managing Director Matthew Duder said.
"Sole builders are at just 57% capacity on average, and companies of two to five employees are only at 63% capacity.
"These businesses typically focus on residential work, which has seen an earlier downturn than the commercial market," Duder said.
Looking ahead, the pipeline of work is slowing to a trickle, with the number of imminent building project starts down 64% compared to a year ago.
The full Builder Sentiment Report is available here.
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71 Comments
I was in Rotorua the other day, and the buses had big ads from the local National MP saying he was gonna get rid of emergency housing motels.
And i thought, great time to cancel the governments social housing build program, that's really going to help end emergency housing motels.
Government says households living in emergency housing down 32% over six months
https://www.nzherald.co.nz/nz/politics/government-says-households-livin…
Kiwikids probably does think it's due to National. Anecdotally, a lot of it is probably down to all new public housing stock coming online over the last 6 - 12 months that I see on Kainga Ora's Facebook page.
https://www.beehive.govt.nz/release/labour-delivers-12000-more-public-h…
"Anecdotally..." ok
Perhaps not:
https://www.1news.co.nz/2023/12/02/public-housing-waitlist-spikes-over-….
Haven't we seen a massive increase in the waiting list for social hosuinf during the biggest financial boom in most people's lifetime.
If we have to assume the cost of housing is the issue for people needing staye houses. Then it's a good reason to keep the ocr hfl and drive house prices down to affordable levels.
There are tons of houses for sale so demand isn't an issue anymore. Just keep credit cost high and wait. Social housing wait list will drop with rents and house prices. No problem. Govt also has a plan to reduce beneficiaries that will help too.
No. If the Ponzi goes, everything goes. Forget any 'recession-like' conditions, you'd be talking about depression. Housing stock values underpin much of the pvte sector-derived economic activity. They're our capital base from which much of the credit creation has been stored.
The RNBZ will come riding to the rescue
Which would likely mean that the central bank would guarantee the sale price of houses at the price that vendors want and expect.
That is 'depression-like'. Just because it doesn't fit within your mental frame of what a depression is doesn't matter.
https://en.wikipedia.org/wiki/Economic_depression
Can I respectfully suggest that it is your mental frame of what a depression is that is questionable?
Can I respectfully suggest that it is your mental frame of what a depression is that is questionable?
When your economy and capital base is entirely dependent on the actions of a central bank removing the cost of capital, as far as I'm concerned, that's depression like. Yes, I know you probably need parameters defined by bureaucrats and historical precedent (of which only 1 exists in modern economic history).
Now you can argue that this is the situation in Japan - but the cost of capital has not been near zero - regardless of what you believe.
RBNZ cannot hold prices up they will collapse, but it can engineer a lost decade like Japan so that the debt is repaid, perhaps 2 decades...
It will feel like a depression...
They have so many levels they can pull to ensure that people pay back the debt. Some will not be able too, it will be more then we are used to seeing.
They will make up a 3 or 4 letter acronym for the program, which may well entail the printing of money for funding NZ Banks secured against bank mortgage assets.... as repaid the printed money can be destroyed, one could (and many have) argued its not inflationary... and interest is paid on the MAGIC money...
Remember there is no end to the F.....y. unless you remove your money into gold/rat poison
RBNZ cannot hold prices up they will collapse, but it can engineer a lost decade like Japan so that the debt is repaid, perhaps 2 decades..
Disagree. We cannot engineer lost decades like Japan because they have the highest net international investment position (NIIP) in the world and whose savings the world depends on.
They started that program with real savings, now days we just print missing money... FLP Virgil... thunderbirds are go.
As much as you will stand aghast , push comes to shove this will occur.
We are not the only country facing this problem, China is miles down the road to reality right now. They have a bigger problem, mortgages issued on projects that developers have not even started building on, imagine the scale of that issue.
its global,
They started that program with real savings, now days we just print missing money... FLP Virgil... thunderbirds are go.
Not referring to you, but I find it strange that Aotearoans thinks we can "just do what Japan did." It's village idiot-level in any kind of understanding in how we compare in terms of NIIP.
And in a nutshell that is our problem. Trying to build on top of a house of cards built on sand.
It's impossible to keep the ponzi rising..... society is already crumbling here. Smart 20 something are leaving about as fast as air nz can fly them to Oz. The poor are barely affording to eat and we are out of houses for them. Public services and infrastructure are a mess and no money left in the pot to sort them.
So looks likea slow deflation of the bubble is required And looks like already rbnz and our coalition are doing just that.. I see luxon is selling his first house of 7.... that might give us a hint of what he thinks is coming.
I reckon the current record stock of house for sale will double by next year. Retirees, builders, people leaving for Oz and newly unemployed will all be fighting over any buyer left and crazy enough to want a house here.
Wr can't just make credit cheaper and jmport people any more. The game is over.
We have a record number of houses for sale.
Our population is decreasing.
Birth rates dropping.
A significant number of kiwis are emigrating due to house prices.
The waiting list for social housing is apparently dropping.
We don't actually need more houses. There's noone to buy them.
Keep the ocr high and the stock we have will fall in price.
Easy.
We have been building houses based on some ponzi where everyone made money buying, sitting on them and selling them to each other. We import low skilled worker who rented them. It's all a bunch of hype. If we can't import more high skilled workers than we export.. there no shortage of houses problem needing to be solved. Just affordability .. which will happen on its own.
https://www.eboss.co.nz/assets/marketing/construction-industry-confiden…
Does it? Looks like the significant jumps in "too many staff" from 2022 to 2024 means significant layoffs are coming. That's pretty grim.
What's the different picture you're seeing?
Page 19 - Builders (and their customers - including me) have Councils "top of the list" as being blockers to efficient building.
Isn't it about time central government demanded Councils do better? One option would be to allow Council to continue to make the rules but split all the other functions into new centrally managed unit. (That's also be good for democracy too as it'd stop the cozying up to Council staff that sees some developments blocked but near identical ones sail through.)
Yes consenting is a major issue - both resource consents and building consents.
I favour the Japanese planning system, which is permissive, but also black and white - you comply or don’t comply (with a small number of rules). With no discretionary, subjective design review.
The discretionary system here creates huge issues. And governments never seem to look at this.
What do you reckon would be enough? A cut of 1%? And that will take the OCR back to 4.5% - what it was 25 years ago when we adopted the tethered process and we had a CPI of 0% at the time?
So, let's do some hypothetical sums . Today's CPI Rate of 3.3% + 4.5% over 0% establishment rate = 7.8%. And probably where it should be today.
https://www.interest.co.nz/charts/prices/consumer-prices-index
https://www.parliament.nz/mi/pb/library-research-papers/research-papers…
It’s dire, and getting worse.
Interesting, have been talking to a few consultant planners. Some are quiet, some are still pretty busy, and I understand from Council staff that while resource consent application numbers are well down from peak, they are still getting a reasonable number of resource consent applications for smaller (4-6 dwellings) developments. I suspect these are mum and dad type developers.
But apparently the volume of applications for mid to large scale development is way, way down…
The new chair of Kainga Ora appointed by Bishop after the Bill English hit job report,
states KO has done and excellent job, delivering 4000 home the past year and 3500 homes this current year until National pilled the pin on KO
https://www.rnz.co.nz/news/national/521039/kainga-ora-chief-s-exit-new-…
Its still doing much better than what I expected, which has always been my point.
I never thought massive interest rate increases were going to be great for builders. But consents are still running at fairly reasonable levels, new builds are still being started (why I am not certain).
Like the unemployment rate, building consents are still doing about the same as when Labour won the election in 2017: https://www.interest.co.nz/property/128520/value-new-residential-constr…
- building consents take ridiculous time for councils to process. Often 6 months+ for mid-large size projects
- I expect (and kind of know from my work) that many of the consents issued over the last couple of months won’t mean much in terms of short-term build plans, and they would have been from applications made late last year / early this year. A lot of sunken costs, so might as well just get the consents. And then monitor things
- consents are tracking similar to what I thought. 38% down from peak , I said 40%. It could easily be 50% plus
- Within a year I expect building completions to be down around 50% from peak. It’s lagging stuff, but yes the data will eventually show how bad it is
- anecdotally, starts are falling off a cliff
people get fooled by the decent number of developments still under construction. But many of these are 70% plus finished
New ground around me in Auck is being cleared now (Old 1970s ratboxes) and then the Chinese work crew's "bee hive" the site and finish in record time.......but who in their right mind is buying these at the required 700 to 850K ?
Still currently, there are 15x nearby units unsold, for well over 7 months, around the local traps.
Looks like we got a mini: Irish or Spanish style overbuild going on.
It may be the final death throes of the Ponzi, once the next 2 years of major declines, bake the overleveraged.
I told you construction is dead Jimbo. To be fair, the construction sector has been far more resilient than I had given it credit for. The backlog is definitely running on fumes now. New housing, alterations, renovations and additions are all drying up, particularly the new housing sector.
The government has said it needs house price’s to fall, land to be open up by councils should take down costs of building and the fact that average wage couples have no chance of getting a large enough mortgage to buy from scratch in most areas means the t crash will continue for quite some time. Only a simple person would lower the OCR before FED starts to cut.
I started a new house last week.
It took 6 months to get it through Auckland Council. It was absolutely outrageous. The moron I was dealing with argued over the amount of light coming in, even though the front of the house is 50% windows and north-facing, he said it had too many internal doors and I could convert the lounge into another bedroom. Even though my wife and I will be the sole occupants.
This is a person with a 'degree'.
It cost about $10,000 for all this, finally I exploded and tore the offending official to shreds, I threatened him with going to the Mayor. Problem solved in 2 days with the original plans approved.
Civil servants feathering their nests. And I keep reading here new house prices are coming down...yeah right!!!!
As long as you don't minding paying for civil servants doing nothing. Comrade Ardern's government hired 16,000 of them.
The PM was my boss a few years ago, a very good guy who knows exactly what he's doing. He's a tough, but fair customer, not a man to be trifled with.
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