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Speaker 1: Chielder.

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Speaker 2: I'm Chelsea Daniels and this is the Front Page, a

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Speaker 2: daily podcast presented by the New Zealand Herald. We've all

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Speaker 2: got an anecdote or story about a trade who did

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Speaker 2: us dirty or an issue with a new build.

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Speaker 1: Well, now we've got some actual.

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Speaker 2: Evidence around what's happening in the construction industry. The Building

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Speaker 2: Research Association of New Zealand has launched a new Build

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Speaker 2: Insights tool to provide accurate information on everything from trading

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Speaker 2: callbacks to new apprenticeships and the cost of new builds. Later,

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Speaker 2: we'll be joined by Brand's senior economist Matt Curtis to

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Speaker 2: talk through the broader economic picture. But first on the

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Speaker 2: Front Page ends At Herald, Head of Data Chris Knox

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Speaker 2: is with us to run through some of the key

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Speaker 2: stats when it comes to tradees. Chris, let's start with

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Speaker 2: the one thing everyone wants, the answer to which trady

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Speaker 2: do people call back the most to fix an issue

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Speaker 2: after they've moved in.

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Speaker 3: It turns out it's painters. Fifty percent of people of

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Speaker 3: new homeowners report that painters need to come back after

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Speaker 3: they've moved in.

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Speaker 1: And why is that they've just done a shoddy job or.

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Speaker 3: Well, I'm not sure. This is not something I'm not

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Speaker 3: certain about. It could also be that they are impacted

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Speaker 3: by other people's work more so, like the painter might

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Speaker 3: do stuff and then you know, the electrician comes in

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Speaker 3: and cuts a new hole, and then the painter needs

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Speaker 3: to come back.

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Speaker 1: Oh right, right.

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Speaker 2: But on top of that, a growing number of people

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Speaker 2: are unhappy with their builders as well.

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Speaker 1: Hey, yeah, I was.

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Speaker 3: Quite surprised at the level of unhappiness with a builder,

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Speaker 3: particularly for a new build, where you know, I feel

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Speaker 3: like things should be a bit more I guess defined

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Speaker 3: or controlled than they are in a renovation. But yeah,

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Speaker 3: it looks like basically one in three people wouldn't recommend

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Speaker 3: their builder after they've completed a new build.

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Speaker 2: That's pretty concerning considering how many people are looking to

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Speaker 2: do building on their house, not even just a new build,

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Speaker 2: but just renoing the kitchen and stuff as well.

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Speaker 1: Hey, yeah, it's certainly.

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Speaker 3: I mean, I guess they were restricted by there's not

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Speaker 3: a lot of not always a lot of choice about

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Speaker 3: which builder you go to, But certainly, I think the

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Speaker 3: thing that sort of struck me from this data is

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Speaker 3: how much kind of more work I'd put into trying

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Speaker 3: to make sure that I was happy with my builder

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Speaker 3: before I got started.

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Speaker 2: There does seem to generally be some rising dissatisfaction with

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Speaker 2: new builds as well.

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Speaker 3: Hey, yes, yeah, I again, I'm not sure kind of

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Speaker 3: what's driving this trend, but people don't seem to be

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Speaker 3: super happy after they've moved in, which you know, it

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Speaker 3: would be pretty gunning to put all that time and

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Speaker 3: money into a house and then not like it.

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Speaker 2: What's some of the data around that seems like a

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Speaker 2: really big thing is the level of communication between the

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Speaker 2: client and the builder.

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Speaker 3: So six only sixty two percent of people are actually

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Speaker 3: happy with the level of communication that they've had now,

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Speaker 3: which has dropped from kind of a peak of seventy

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Speaker 3: five about five years ago. And there's also people are

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Speaker 3: unhappy with completion time.

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Speaker 2: There is some positive news around the price of houses

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Speaker 2: and buying land though.

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Speaker 1: So it's not all bad news, is it.

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Speaker 3: No, there's been a decrease in the cost of land.

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Speaker 3: In fact, brains reckons it's about the lowest it's been

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Speaker 3: in about three years, and the cost of land plus

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Speaker 3: a new build is about four percent down on what

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Speaker 3: it was, although on average about two hundred thousand dollars

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Speaker 3: more than buying an already existing house.

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Speaker 4: It's all very well government saying that they're going to

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Speaker 4: pop their finger on the scale and dictate terms to

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Speaker 4: how expensive a house is going to be. But the

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Speaker 4: reality is, as soon as they declare that they're going

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Speaker 4: to develop in a particular area, land values go up

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Speaker 4: and therefore costs go up. The market is what the

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Speaker 4: market is. It costs a particular amount of money to

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Speaker 4: be able to deliver a house or particular size and

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Speaker 4: particular location. That is the fact. You can't have it

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Speaker 4: both ways.

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Speaker 2: And for those people who aren't happy with their builders,

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Speaker 2: I suppose it's good news that there's more of them

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Speaker 2: joining the industry.

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Speaker 3: Yeah, there's been a really big search in the number

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Speaker 3: of people doing apprenticeships and other training related to trades.

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Speaker 3: It's nearly doubled in ten years, which I thought was

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Speaker 3: quite surprising.

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Speaker 1: Yeah, considering how.

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Speaker 2: Difficult it is to get someone out to your house,

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Speaker 2: especially on a weekend, I don't know if you lock

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Speaker 2: your key in, for example.

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Speaker 3: This sounds like it might not be hypothetical. I guess

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Speaker 3: another thing that maybe could be something we should be

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Speaker 3: looking at in the future is how many people are

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Speaker 3: training in new Zealand and then going and working overseas.

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Speaker 3: Potentially the construction detector might suffer from some of the

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Speaker 3: same dynamics that our other training sectors do.

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Speaker 2: Yeah, so we spend all of the time training you know,

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Speaker 2: plaster up here and then they go to Aussie and

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Speaker 2: get paid double.

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Speaker 1: That's that same old story.

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Speaker 3: I suspect that could be in play.

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Speaker 1: Yes, is there any other data that stood out to you, Chris?

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Speaker 3: I was actually quite surprised by the variation and how

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Speaker 3: long it takes to get a consent done. So you've

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Speaker 3: got some councils that are getting have a medium processing

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Speaker 3: time of five days, which is essentially just a week,

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Speaker 3: and then other councils it's more like three weeks. And

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Speaker 3: then obviously it's a median, so there's a whole lot

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Speaker 3: more that are much higher than that.

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Speaker 1: Yeah, where's the worst place?

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Speaker 3: The worst place is whay Kado District Council, although Auckland

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Speaker 3: Council is the worst of kind of the large councils

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Speaker 3: and Carterendon is the place to where things happen really quickly.

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Speaker 2: Should there be some kind of regulatory framework that covers

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Speaker 2: the entire country or do we just leave it up

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Speaker 2: to the councils individually to sign off on these things.

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Speaker 3: I mean, this is a, I guess, a politically charged question,

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Speaker 3: but I do my personal opinions. Sixty six different organizations

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Speaker 3: doing building consensus too many for a country of five million.

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Speaker 1: Thanks for joining us, Chris Norris, you are.

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Speaker 2: For a deeper insight into the new build Insights tool

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Speaker 2: and what it means for the wider economy. We're joined

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Speaker 2: now by Brand's senior economist Matt Curtis, So Matt, can

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Speaker 2: you give us some insight into why this tool was

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Speaker 2: created in the first place.

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Speaker 5: There's a lot of building related data out there that's

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Speaker 5: all quite disparate and it doesn't really talk to each other.

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Speaker 5: So what we thought was a good idea was to

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Speaker 5: really try and bring it all together in one source

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Speaker 5: for people to quickly reference and understand what's going on

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Speaker 5: at quite a high level. But it does bring together

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Speaker 5: a whole bunch of data from various sources that can

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Speaker 5: really show people at a high level what's going on

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Speaker 5: across the building and construction system.

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Speaker 2: Is there a bit of a move to limit anecdotes

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Speaker 2: and word of mouth spreading that could give people the

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Speaker 2: wrong idea of where the industry is at.

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Speaker 5: I think it's more about just providing that single source

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Speaker 5: of truth from a trusted and reputal source where we

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Speaker 5: can stop talking about what might be happening out there

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Speaker 5: and focus on what the data's actually telling us is going.

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Speaker 3: On on the ground.

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Speaker 2: Right, So, looking into the data, new builds continue to

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Speaker 2: be expensive, what are the factors driving those costs?

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Speaker 5: A lot of the factors relate to how sticky some

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Speaker 5: of the pricing can be sections. For example, the purchasing

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Speaker 5: of land often has a long lag time between when

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Speaker 5: it's purchased and when it's finally brought to market, which

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Speaker 5: does mean that sections can't necessarily respond to the drivers

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Speaker 5: of the day. Then we've got factors such as labor,

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Speaker 5: where labor quite short supply. When demand for construction was

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Speaker 5: so high, it's really hard to then scale down label

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Speaker 5: pricing when things start to slow down. And then materials,

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Speaker 5: we had some supply chain issues, a lot of demand

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Speaker 5: for these building products and they went up at the

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Speaker 5: same time. It was almost a perfect storm there for

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Speaker 5: a little while during that sort of pandemic.

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Speaker 2: Are we seeing any improvement here, because we've been talking

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Speaker 2: about this since COVID so is there any light at

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Speaker 2: the end of the tunnel.

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Speaker 5: Yes, So we're starting to see land prices respond to

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Speaker 5: the fact that we're just not building to the same

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Speaker 5: extent as we were. Some of the medium density stuff.

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Speaker 5: We can build that at a cheaper price per unit,

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Speaker 5: then we can standalone, so that brings some efficiencies as well,

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Speaker 5: and materials are starting to slowly come back down. It

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Speaker 5: is a global market, and what we're seeing is that

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Speaker 5: demand internationally is starting to slow and therefore we're seeing

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Speaker 5: some of the price implications of that slow down flow

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Speaker 5: through to New Zealand.

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Speaker 2: So the construction industry is growing according to this data

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Speaker 2: eighty one one thousand, eight hundred and ninety one businesses

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Speaker 2: in twenty twenty four, but construction business liquidations were up

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Speaker 2: thirty seven percent as well and made up thirty one

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Speaker 2: percent of all business liquidations. What's fueling this boom and

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Speaker 2: I suppose bust At the same time.

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Speaker 5: It was a difficult time for the construction industry as

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Speaker 5: we sort of came out of the COVID pandemic. We

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Speaker 5: saw a lot of pricing that was put in pre

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Speaker 5: pandemic or pre supply chain issues that then was really

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Speaker 5: hard to meet when those price increases came through the system,

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Speaker 5: So there was a little bit of time at it

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Speaker 5: top of the industry to respond to those issues, and

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Speaker 5: that did pot some construction businesses in a hard spot.

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Speaker 5: What we're seeing now is that there's a bit more

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Speaker 5: pricing certainty in the system, able to better design and

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Speaker 5: build at the price points that they need to clear

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Speaker 5: these houses and buildings more generally, So we're starting to

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Speaker 5: see a system that's kind of starting to reset, rebalance,

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Speaker 5: come into the norm I think, and.

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Speaker 2: I guess there's a tendency for construction workers to be

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Speaker 2: more self employed. Hey, can that be difficult to maintain?

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Speaker 5: It can be difficult to maintain profit margins when it

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Speaker 5: really depends on how much work you've got going on.

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Speaker 5: So a building system or workloads that can be quite

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Speaker 5: variable can impact someone who's a solved proprietor you know,

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Speaker 5: they work by themselves a lot more than a large

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Speaker 5: construction firm, so it will be less resilient to those

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Speaker 5: fluctuations in the short term.

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Speaker 2: There's also data in this tool around trading callbacks and

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Speaker 2: how often roofers or painters are getting us to come

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Speaker 2: back and touch something up. What do you hope people

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Speaker 2: do with this information.

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Speaker 5: I just think it's a really good way for the

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Speaker 5: industry to start measuring what they're doing, understand the size

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Speaker 5: of the problem, and then think about ways that they

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Speaker 5: can improve it. I think it's important with some of

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Speaker 5: the defect stuff to kind of contextualize it as well.

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Speaker 5: A building is a very complex system of moving parts

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Speaker 5: are going and doing work sequenced, but you're relying on

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Speaker 5: someone who comes in before you to do a good

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Speaker 5: job to then come and do your piece. Sometimes secuencing

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Speaker 5: doesn't work. Sometimes something can come up after you have

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Speaker 5: completed your work that means that you have to come back.

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Speaker 5: So of our classic example here being painters coming to

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Speaker 5: do touch ups because someone might have dinged the wall

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Speaker 5: when they were moving something in or something like that.

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Speaker 5: So there are numerous factors that can actually lead to

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Speaker 5: defects on a building site, not just the quality of

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Speaker 5: workmanship from one trade to the next.

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Speaker 2: Well that's what I was going to say. Hey, so

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Speaker 2: it's not always someone doing shoddy work or something like that,

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Speaker 2: but it does matter what the person does before you.

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Speaker 5: Exactly, and as a system, it's good to recognize that

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Speaker 5: we all play a part towards a good quality outcome

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Speaker 5: at the end of the day, So tracking it as

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Speaker 5: a system is important, but also having those processes and

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Speaker 5: procedures in place on site that someone can take hold

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Speaker 5: of quality and be responsible for it. It's really important.

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Speaker 2: Well, do you think that we've lost that kind of

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Speaker 2: quality control aspect of building.

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Speaker 5: Not necessarily, it's just not something that's being done in

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Speaker 5: a conscious or considered way. Often you do need someone

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Speaker 5: who's ultimately responsible for delivering to that client, and sometimes

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Speaker 5: that can be lost when we do ramp up there's

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Speaker 5: a lot of activity going on. It can be difficult

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Speaker 5: to keep control of site to site rather than looking

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Speaker 5: at you everything that you're trying to build.

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Speaker 2: At the same time, there are some signs of more

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Speaker 2: apprentices coming into the industry, which is obviously a good thing.

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Speaker 2: But when you look at some of the data on

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Speaker 2: callbacks and growing dissatisfaction and businesses going under, do you

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Speaker 2: think we need to look a little bit more at

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Speaker 2: the standards or regulations or even training.

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Speaker 5: Again, it's not necessarily the case. I think it's important

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Speaker 5: that we have a strong influx of a prince's coming in,

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Speaker 5: particularly when we're sort of aware of what could be

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Speaker 5: coming out of the industry over the next few years.

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Speaker 5: We do know that we have an aging workforce, so

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Speaker 5: it's important to keep furnishing the staff so we've still

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Speaker 5: got the capability to deliver on everything that needs to

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Speaker 5: be built. It's just making sure that we're pairing our

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Speaker 5: apprentices with good experienced builders or trades so that they're

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Speaker 5: able to learn on the job to a satisfactory level.

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Speaker 2: And I guess from an economic perspective, it's not great

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Speaker 2: for us as a nation if we are spending a

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Speaker 2: lot more time and money on getting our houses fixed up.

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Speaker 2: The obvious example is the leaky building crisis, but more

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Speaker 2: recently we reported earlier this year on new builds in

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Speaker 2: Auckland overheating over summer just because of the way that

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Speaker 2: they're made.

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Speaker 6: The fundamental cause of the issue is the lack of

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Speaker 6: requirement to consider overheating in the building code and how

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Speaker 6: that comes to reality is a lot of overglazing. We

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Speaker 6: focused a lot on the view and getting daylight into

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Speaker 6: homes and that is a good thing, but we tend

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Speaker 6: to overglaze a lot of our houses and we don't

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Speaker 6: have adequate shady.

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Speaker 2: And from I guess an even more micro level, My

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Speaker 2: producer had to work from home, for example, for a

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Speaker 2: couple of days last week because he needed to get

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Speaker 2: his curtain rail fixed and it actually took four visits

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Speaker 2: in total for the plastering and painting to be completed.

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Speaker 2: He then had to work from home, and that affects

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Speaker 2: productivity down the line.

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Speaker 5: Hey, exactly, there are numerous flow on effects two things

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Speaker 5: not being done right first time.

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Speaker 2: From the data that you've collected and in creating this,

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Speaker 2: what's something that stood out to you that may have

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Speaker 2: surprised you, shocked you good or bad?

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Speaker 5: I think that's something that I always find quite surprising

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Speaker 5: about this is just that difference between the cost of

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Speaker 5: buying existing home versus building something new, something that we

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Speaker 5: often think of as being a trade off in the system,

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Speaker 5: but that we're finding that actually that cost of frencher

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Speaker 5: can be upwards of two hundred thousand dollars at a time.

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Speaker 5: We're housing affordability is a real issue in New Zealand,

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Speaker 5: really trying to start light on how hardened is going

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Speaker 5: to be fixed some of these problems going forward. We

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Speaker 5: can't necessarily just build our way out of their housing

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Speaker 5: affordability issue.

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Speaker 1: And do you think it's quite important because we obviously

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Speaker 1: need more houses.

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Speaker 2: We've been told that for it feels like decades now

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Speaker 2: that we need to keep building houses.

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Speaker 1: We need houses, houses, houses.

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Speaker 2: But is there a fear that if you try to

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Speaker 2: go as quickly as possible then you end up with

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Speaker 2: shoddy work.

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Speaker 5: It's about right sizing. I think for me, it's more

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Speaker 5: of an issue when you have these large swings and

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Speaker 5: activity rather than the share amount of houses that we

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Speaker 5: need to build. If we can consistently deliver a pipeline

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Speaker 5: of say forty thousand new houses a year, the industry

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Speaker 5: is skilled and has capability and capacity to do so.

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Speaker 5: What we can't do is suddenly decide that we need

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Speaker 5: to build fifty thousand houses then come down to thirty.

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Speaker 5: That's where you start to lose those skills or that

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Speaker 5: ability to get through the sharer number of houses that

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Speaker 5: we need to and that's when workmanship issues can start

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Speaker 5: to show up.

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Speaker 1: Thanks for joining us, Matt, Thank you for having me.

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Speaker 2: That's it for this episode of the Front Page. You

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Speaker 2: can read more about today's stories and extensive news coverage

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Speaker 2: at enzdherld dot co dot nz. The Front Page is

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Speaker 2: produced by Ethan Sills and Richard Martin, who is also

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Speaker 2: our sound engineer. I'm Chelsea Daniels. Subscribe to the front

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Speaker 2: page on iHeartRadio or wherever you get your podcasts, and

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Speaker 2: tune in tomorrow for another look behind the headlines.