December 2013
www.waterfordpress.co.nz
Focus on Southland Page 39
Building industry under pressure Hugh de Lacy An influx of immigrants will be needed to keep pace with the burgeoning demands of the country’s building industry, according to Warwick Quinn, the chief executive of the Master Builders’ Federation. “If all the dominoes fall in a row – Christchurch is flat out, the commercial sector’s busy, residentials are in the middle of re-build work, Auckland is still growing at its current rate of 25% over the last 12 months, and the rest of the economy picks up – in 18 months we’ll be well short of the number [of construction workers] we need,” Quinn said. “The projections are we’re likely to need between 35,000 and 40,000 tradespeople during the peak of the building boom, which is expected to last from now until 2018. “You’re going to find that a lot more immigrants
are going to be required because the rest of New Zealand is picking up, providing competition to Christchurch and Auckland.” Quinn said the country had been through five years of recession, and two years ago recorded the lowest number of building consents ever. The recession saw extensive shedding of staff and restructuring of companies to accommodate the shrinkage, which made expanding to handle the current boom that much harder. “All things being equal and in a steady state, we can cope with 20,000 to 25,000 new homes a year, and if it’s a gentle growth curve we can cope with that,” Quinn said. “But many more house-starts than that and the sector “would start to creak at the seams,” Quinn said. “Two years ago we were doing a little under 13,000 to 14,000; last year 17,000 new homes were built, and this year the total will top 20,000.”
Residential building consents were the most reliable measure of overall construction activity because variations in the size of individual commercial building consents could distort the overall picture. Also, residential consents outnumbered commercial ones, and were four times bigger than consents for alterations and additions. Despite the booming outlook for the industry, there were some “headwinds,” Quinn said. “There’s a potential increase in interest rates: the Reserve Bank can’t hold them low any more with the OCR (Overnight Cash Rate) being just 2.5%.” The bank’s loan-to-value-ratio (LVR), imposed last month to take some of the steam out of the rapidly inflating housing market by requiring buyers to have 20% deposits, would flow through into reduced house-starts in March-April of next year. That might prove useful, Quinn said.
“It might stall the level of growth so we’re able to respond without so much need for immigration.” However the biggest impact on current house prices was not a shortage of workers, but a shortage of land, resulting in “rapid capital gains in the property market because we can build houses fast enough when we need them.” The appreciation in land values would also reduce the number of low-cost new homes being built, because the high cost of a section demanded the construction of a high-cost home to match. Grant Florence, the chief executive of the Certified Builders Association, the other major building lobby group, said the building industry was “definitely at capacity in Christchurch and building quickly in Auckland. “In the regions, activity levels have increased but it’s not consistent – it’s quite choppy – so I suspect there’s still capacity in the regions; not plenty but some,” Florence said.
No wind down yet for Quake contractor Hugh de Lacy The Earthquake Commission (EQC) may have signalled a 2014 end to the Canterbury earthquakes residential repair project, but its lead contractor, Fletcher Earthquake Recovery (EQR) is by no means going into shrinkage mode yet. “There’s still 12 months to go, and there’s still the likelihood of 20,000 or more repairs to be done, so we’re not winding down at this stage,” Fletcher EQR spokesperson Barry Akers says. Akers said the company was working towards closure at the end of 2014 but had yet to begin shedding staff. “Exactly what the shape of the network will be in the latter part of that period hasn’t been addressed yet,” Akers said. By the end of the first week in December, Fletcher EQR and its 1269 accredited contractors had completed 48,233 full-scope repairs and 47,517 emergency repairs for a total outlay of $1.5 billion. The final residential repairs bill is expected to be around $4 billion. Fletcher EQR has the contract to manage residential repairs costing between $15,000 and $100,000. Those below the $15,000 mark are mostly settled by EQC for cash while those exceeding $100,000 are the responsibility of the homeowner’s insurance company.
INSIDE
Busy skies above Invercargill.... A ski-equipped United States Air Force (USAF) Lockheed C130 Hercules aircraft lands in Invercargill to refuel on its way south as part of the US Antarctic Programme. The USAF has opted to use Invercargill to refuel the Hercules on journeys south from Christchurch to Antarctica this summer. Invercargill Airport general manager Chloe Scala says it’s great news
Printing firm wins acclaim - PAGE 2
Nightside Design going global PAGE 3
for the airport and the city to be recognised as a refuelling destination. “The combination of Invercargill’s location, as well as the airport facilities ticked the boxes required for this type of operation,” she said. The USAF move is another feather in the cap for Southland, which is also benefiting from the dairying boom. See Southland focus - pages 39-47
New supermarket on track - PAGE 5
www.waterfordpress.co.nz