With the combination of higher construction prices, rising mortgage interest rates and a cooling housing market dampening demand for new homes, the industry is having to downsize, industry sources told Stuff, an online news service.
According to the Canterbury Construction Report, the city council in Christchurch (the largest city on the South Island) has received 3.4% fewer residential building consent applications than it had forecast and 11.7% fewer than in the same period last year. As a result, it now expects to receive 15.6% fewer applications in the next six months than the same period last year.
Christchurch builder Peter de Gouw, told Stuff that he had to lay off five of his 10 staff four weeks ago. “There’s not nothing happening, but there’s very little happening,” he said. “It seems to be very widespread. We’re pretty quiet.
“There’s plenty of people with money, but they are sitting on their hands waiting to see what happens with interest rates and whether there’ll be a change of government. There’s a strong feeling of lack of confidence.”
De Gouw described the shift as part of the normal construction “boom-bust cycle”. He said he expects things to pick up next year, but it was still hard for those who lost work.
Mike Blackburn, author of the Canterbury Construction Report, said between 2018 and 2022 there had been a “massive increase in consents, mirrored across all of New Zealand”. In Christchurch, this had followed a slowdown as rebuilding work following the 2011 earthquake tapered off.
He added that there had been indications of a slowdown over the past year, with consent numbers reflecting slower sales by builders and developers since the start of 2022.
Brent Norling, principal at law firm Norling Law, said that about 70% of his business now comes from the construction industry. “I predict we are set for a sustained period of downturn in building consents across the construction industry,” he said.
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