The economy’s influence on construction

Key points from the video with Carl & Mike

  1. The construction industry in New Zealand has seen a decline in activity over the past 12 months due to a tightening economy.
  2. Small builders have been less affected by the fluctuations compared to larger group builders.
  3. Some builders have shifted their focus to renovations, bathrooms, and kitchens as new housing construction has slowed down.
  4. The high cost of building materials and land has made it challenging to build affordable new homes.
  5. There has been a significant slowdown in the construction industry, but positive signs are emerging with increased sales inquiries.
  6. High net migration into the country is expected to drive future housing demand.
  7. The tightening market has led to builders competing on price, undercutting each other and accepting lower hourly rates.
  8. The cooperative model offers consistent pricing for materials across New Zealand, helping builders control their business pricing.
  9. External factors like economic conditions, supply chain issues, and high-interest rates have negatively impacted the construction industry.
  10. The outlook is positive for a lift in construction activity in early 2024 as the economy stabilizes.

The Good News

So the good news is that the construction industry is really, really strong. Building and consents, construction activity is still high.

There have been a lot of liquidations, but I think sort of going forward early into 2024. That we’ll see a positive lift and construction activity again.