Speaker 1: Chielder.
Speaker 2: I'm Chelsea Daniels and this is the Front Page, a
Speaker 2: daily podcast presented by the New Zealand Herald. We've all
Speaker 2: got an anecdote or story about a trade who did
Speaker 2: us dirty or an issue with a new build.
Speaker 1: Well, now we've got some actual.
Speaker 2: Evidence around what's happening in the construction industry. The Building
Speaker 2: Research Association of New Zealand has launched a new Build
Speaker 2: Insights tool to provide accurate information on everything from trading
Speaker 2: callbacks to new apprenticeships and the cost of new builds. Later,
Speaker 2: we'll be joined by Brand's senior economist Matt Curtis to
Speaker 2: talk through the broader economic picture. But first on the
Speaker 2: Front Page ends At Herald, Head of Data Chris Knox
Speaker 2: is with us to run through some of the key
Speaker 2: stats when it comes to tradees. Chris, let's start with
Speaker 2: the one thing everyone wants, the answer to which trady
Speaker 2: do people call back the most to fix an issue
Speaker 2: after they've moved in.
Speaker 3: It turns out it's painters. Fifty percent of people of
Speaker 3: new homeowners report that painters need to come back after
Speaker 3: they've moved in.
Speaker 1: And why is that they've just done a shoddy job or.
Speaker 3: Well, I'm not sure. This is not something I'm not
Speaker 3: certain about. It could also be that they are impacted
Speaker 3: by other people's work more so, like the painter might
Speaker 3: do stuff and then you know, the electrician comes in
Speaker 3: and cuts a new hole, and then the painter needs
Speaker 3: to come back.
Speaker 1: Oh right, right.
Speaker 2: But on top of that, a growing number of people
Speaker 2: are unhappy with their builders as well.
Speaker 1: Hey, yeah, I was.
Speaker 3: Quite surprised at the level of unhappiness with a builder,
Speaker 3: particularly for a new build, where you know, I feel
Speaker 3: like things should be a bit more I guess defined
Speaker 3: or controlled than they are in a renovation. But yeah,
Speaker 3: it looks like basically one in three people wouldn't recommend
Speaker 3: their builder after they've completed a new build.
Speaker 2: That's pretty concerning considering how many people are looking to
Speaker 2: do building on their house, not even just a new build,
Speaker 2: but just renoing the kitchen and stuff as well.
Speaker 1: Hey, yeah, it's certainly.
Speaker 3: I mean, I guess they were restricted by there's not
Speaker 3: a lot of not always a lot of choice about
Speaker 3: which builder you go to, But certainly, I think the
Speaker 3: thing that sort of struck me from this data is
Speaker 3: how much kind of more work I'd put into trying
Speaker 3: to make sure that I was happy with my builder
Speaker 3: before I got started.
Speaker 2: There does seem to generally be some rising dissatisfaction with
Speaker 2: new builds as well.
Speaker 3: Hey, yes, yeah, I again, I'm not sure kind of
Speaker 3: what's driving this trend, but people don't seem to be
Speaker 3: super happy after they've moved in, which you know, it
Speaker 3: would be pretty gunning to put all that time and
Speaker 3: money into a house and then not like it.
Speaker 2: What's some of the data around that seems like a
Speaker 2: really big thing is the level of communication between the
Speaker 2: client and the builder.
Speaker 3: So six only sixty two percent of people are actually
Speaker 3: happy with the level of communication that they've had now,
Speaker 3: which has dropped from kind of a peak of seventy
Speaker 3: five about five years ago. And there's also people are
Speaker 3: unhappy with completion time.
Speaker 2: There is some positive news around the price of houses
Speaker 2: and buying land though.
Speaker 1: So it's not all bad news, is it.
Speaker 3: No, there's been a decrease in the cost of land.
Speaker 3: In fact, brains reckons it's about the lowest it's been
Speaker 3: in about three years, and the cost of land plus
Speaker 3: a new build is about four percent down on what
Speaker 3: it was, although on average about two hundred thousand dollars
Speaker 3: more than buying an already existing house.
Speaker 4: It's all very well government saying that they're going to
Speaker 4: pop their finger on the scale and dictate terms to
Speaker 4: how expensive a house is going to be. But the
Speaker 4: reality is, as soon as they declare that they're going
Speaker 4: to develop in a particular area, land values go up
Speaker 4: and therefore costs go up. The market is what the
Speaker 4: market is. It costs a particular amount of money to
Speaker 4: be able to deliver a house or particular size and
Speaker 4: particular location. That is the fact. You can't have it
Speaker 4: both ways.
Speaker 2: And for those people who aren't happy with their builders,
Speaker 2: I suppose it's good news that there's more of them
Speaker 2: joining the industry.
Speaker 3: Yeah, there's been a really big search in the number
Speaker 3: of people doing apprenticeships and other training related to trades.
Speaker 3: It's nearly doubled in ten years, which I thought was
Speaker 3: quite surprising.
Speaker 1: Yeah, considering how.
Speaker 2: Difficult it is to get someone out to your house,
Speaker 2: especially on a weekend, I don't know if you lock
Speaker 2: your key in, for example.
Speaker 3: This sounds like it might not be hypothetical. I guess
Speaker 3: another thing that maybe could be something we should be
Speaker 3: looking at in the future is how many people are
Speaker 3: training in new Zealand and then going and working overseas.
Speaker 3: Potentially the construction detector might suffer from some of the
Speaker 3: same dynamics that our other training sectors do.
Speaker 2: Yeah, so we spend all of the time training you know,
Speaker 2: plaster up here and then they go to Aussie and
Speaker 2: get paid double.
Speaker 1: That's that same old story.
Speaker 3: I suspect that could be in play.
Speaker 1: Yes, is there any other data that stood out to you, Chris?
Speaker 3: I was actually quite surprised by the variation and how
Speaker 3: long it takes to get a consent done. So you've
Speaker 3: got some councils that are getting have a medium processing
Speaker 3: time of five days, which is essentially just a week,
Speaker 3: and then other councils it's more like three weeks. And
Speaker 3: then obviously it's a median, so there's a whole lot
Speaker 3: more that are much higher than that.
Speaker 1: Yeah, where's the worst place?
Speaker 3: The worst place is whay Kado District Council, although Auckland
Speaker 3: Council is the worst of kind of the large councils
Speaker 3: and Carterendon is the place to where things happen really quickly.
Speaker 2: Should there be some kind of regulatory framework that covers
Speaker 2: the entire country or do we just leave it up
Speaker 2: to the councils individually to sign off on these things.
Speaker 3: I mean, this is a, I guess, a politically charged question,
Speaker 3: but I do my personal opinions. Sixty six different organizations
Speaker 3: doing building consensus too many for a country of five million.
Speaker 1: Thanks for joining us, Chris Norris, you are.
Speaker 2: For a deeper insight into the new build Insights tool
Speaker 2: and what it means for the wider economy. We're joined
Speaker 2: now by Brand's senior economist Matt Curtis, So Matt, can
Speaker 2: you give us some insight into why this tool was
Speaker 2: created in the first place.
Speaker 5: There's a lot of building related data out there that's
Speaker 5: all quite disparate and it doesn't really talk to each other.
Speaker 5: So what we thought was a good idea was to
Speaker 5: really try and bring it all together in one source
Speaker 5: for people to quickly reference and understand what's going on
Speaker 5: at quite a high level. But it does bring together
Speaker 5: a whole bunch of data from various sources that can
Speaker 5: really show people at a high level what's going on
Speaker 5: across the building and construction system.
Speaker 2: Is there a bit of a move to limit anecdotes
Speaker 2: and word of mouth spreading that could give people the
Speaker 2: wrong idea of where the industry is at.
Speaker 5: I think it's more about just providing that single source
Speaker 5: of truth from a trusted and reputal source where we
Speaker 5: can stop talking about what might be happening out there
Speaker 5: and focus on what the data's actually telling us is going.
Speaker 3: On on the ground.
Speaker 2: Right, So, looking into the data, new builds continue to
Speaker 2: be expensive, what are the factors driving those costs?
Speaker 5: A lot of the factors relate to how sticky some
Speaker 5: of the pricing can be sections. For example, the purchasing
Speaker 5: of land often has a long lag time between when
Speaker 5: it's purchased and when it's finally brought to market, which
Speaker 5: does mean that sections can't necessarily respond to the drivers
Speaker 5: of the day. Then we've got factors such as labor,
Speaker 5: where labor quite short supply. When demand for construction was
Speaker 5: so high, it's really hard to then scale down label
Speaker 5: pricing when things start to slow down. And then materials,
Speaker 5: we had some supply chain issues, a lot of demand
Speaker 5: for these building products and they went up at the
Speaker 5: same time. It was almost a perfect storm there for
Speaker 5: a little while during that sort of pandemic.
Speaker 2: Are we seeing any improvement here, because we've been talking
Speaker 2: about this since COVID so is there any light at
Speaker 2: the end of the tunnel.
Speaker 5: Yes, So we're starting to see land prices respond to
Speaker 5: the fact that we're just not building to the same
Speaker 5: extent as we were. Some of the medium density stuff.
Speaker 5: We can build that at a cheaper price per unit,
Speaker 5: then we can standalone, so that brings some efficiencies as well,
Speaker 5: and materials are starting to slowly come back down. It
Speaker 5: is a global market, and what we're seeing is that
Speaker 5: demand internationally is starting to slow and therefore we're seeing
Speaker 5: some of the price implications of that slow down flow
Speaker 5: through to New Zealand.
Speaker 2: So the construction industry is growing according to this data
Speaker 2: eighty one one thousand, eight hundred and ninety one businesses
Speaker 2: in twenty twenty four, but construction business liquidations were up
Speaker 2: thirty seven percent as well and made up thirty one
Speaker 2: percent of all business liquidations. What's fueling this boom and
Speaker 2: I suppose bust At the same time.
Speaker 5: It was a difficult time for the construction industry as
Speaker 5: we sort of came out of the COVID pandemic. We
Speaker 5: saw a lot of pricing that was put in pre
Speaker 5: pandemic or pre supply chain issues that then was really
Speaker 5: hard to meet when those price increases came through the system,
Speaker 5: So there was a little bit of time at it
Speaker 5: top of the industry to respond to those issues, and
Speaker 5: that did pot some construction businesses in a hard spot.
Speaker 5: What we're seeing now is that there's a bit more
Speaker 5: pricing certainty in the system, able to better design and
Speaker 5: build at the price points that they need to clear
Speaker 5: these houses and buildings more generally, So we're starting to
Speaker 5: see a system that's kind of starting to reset, rebalance,
Speaker 5: come into the norm I think, and.
Speaker 2: I guess there's a tendency for construction workers to be
Speaker 2: more self employed. Hey, can that be difficult to maintain?
Speaker 5: It can be difficult to maintain profit margins when it
Speaker 5: really depends on how much work you've got going on.
Speaker 5: So a building system or workloads that can be quite
Speaker 5: variable can impact someone who's a solved proprietor you know,
Speaker 5: they work by themselves a lot more than a large
Speaker 5: construction firm, so it will be less resilient to those
Speaker 5: fluctuations in the short term.
Speaker 2: There's also data in this tool around trading callbacks and
Speaker 2: how often roofers or painters are getting us to come
Speaker 2: back and touch something up. What do you hope people
Speaker 2: do with this information.
Speaker 5: I just think it's a really good way for the
Speaker 5: industry to start measuring what they're doing, understand the size
Speaker 5: of the problem, and then think about ways that they
Speaker 5: can improve it. I think it's important with some of
Speaker 5: the defect stuff to kind of contextualize it as well.
Speaker 5: A building is a very complex system of moving parts
Speaker 5: are going and doing work sequenced, but you're relying on
Speaker 5: someone who comes in before you to do a good
Speaker 5: job to then come and do your piece. Sometimes secuencing
Speaker 5: doesn't work. Sometimes something can come up after you have
Speaker 5: completed your work that means that you have to come back.
Speaker 5: So of our classic example here being painters coming to
Speaker 5: do touch ups because someone might have dinged the wall
Speaker 5: when they were moving something in or something like that.
Speaker 5: So there are numerous factors that can actually lead to
Speaker 5: defects on a building site, not just the quality of
Speaker 5: workmanship from one trade to the next.
Speaker 2: Well that's what I was going to say. Hey, so
Speaker 2: it's not always someone doing shoddy work or something like that,
Speaker 2: but it does matter what the person does before you.
Speaker 5: Exactly, and as a system, it's good to recognize that
Speaker 5: we all play a part towards a good quality outcome
Speaker 5: at the end of the day, So tracking it as
Speaker 5: a system is important, but also having those processes and
Speaker 5: procedures in place on site that someone can take hold
Speaker 5: of quality and be responsible for it. It's really important.
Speaker 2: Well, do you think that we've lost that kind of
Speaker 2: quality control aspect of building.
Speaker 5: Not necessarily, it's just not something that's being done in
Speaker 5: a conscious or considered way. Often you do need someone
Speaker 5: who's ultimately responsible for delivering to that client, and sometimes
Speaker 5: that can be lost when we do ramp up there's
Speaker 5: a lot of activity going on. It can be difficult
Speaker 5: to keep control of site to site rather than looking
Speaker 5: at you everything that you're trying to build.
Speaker 2: At the same time, there are some signs of more
Speaker 2: apprentices coming into the industry, which is obviously a good thing.
Speaker 2: But when you look at some of the data on
Speaker 2: callbacks and growing dissatisfaction and businesses going under, do you
Speaker 2: think we need to look a little bit more at
Speaker 2: the standards or regulations or even training.
Speaker 5: Again, it's not necessarily the case. I think it's important
Speaker 5: that we have a strong influx of a prince's coming in,
Speaker 5: particularly when we're sort of aware of what could be
Speaker 5: coming out of the industry over the next few years.
Speaker 5: We do know that we have an aging workforce, so
Speaker 5: it's important to keep furnishing the staff so we've still
Speaker 5: got the capability to deliver on everything that needs to
Speaker 5: be built. It's just making sure that we're pairing our
Speaker 5: apprentices with good experienced builders or trades so that they're
Speaker 5: able to learn on the job to a satisfactory level.
Speaker 2: And I guess from an economic perspective, it's not great
Speaker 2: for us as a nation if we are spending a
Speaker 2: lot more time and money on getting our houses fixed up.
Speaker 2: The obvious example is the leaky building crisis, but more
Speaker 2: recently we reported earlier this year on new builds in
Speaker 2: Auckland overheating over summer just because of the way that
Speaker 2: they're made.
Speaker 6: The fundamental cause of the issue is the lack of
Speaker 6: requirement to consider overheating in the building code and how
Speaker 6: that comes to reality is a lot of overglazing. We
Speaker 6: focused a lot on the view and getting daylight into
Speaker 6: homes and that is a good thing, but we tend
Speaker 6: to overglaze a lot of our houses and we don't
Speaker 6: have adequate shady.
Speaker 2: And from I guess an even more micro level, My
Speaker 2: producer had to work from home, for example, for a
Speaker 2: couple of days last week because he needed to get
Speaker 2: his curtain rail fixed and it actually took four visits
Speaker 2: in total for the plastering and painting to be completed.
Speaker 2: He then had to work from home, and that affects
Speaker 2: productivity down the line.
Speaker 5: Hey, exactly, there are numerous flow on effects two things
Speaker 5: not being done right first time.
Speaker 2: From the data that you've collected and in creating this,
Speaker 2: what's something that stood out to you that may have
Speaker 2: surprised you, shocked you good or bad?
Speaker 5: I think that's something that I always find quite surprising
Speaker 5: about this is just that difference between the cost of
Speaker 5: buying existing home versus building something new, something that we
Speaker 5: often think of as being a trade off in the system,
Speaker 5: but that we're finding that actually that cost of frencher
Speaker 5: can be upwards of two hundred thousand dollars at a time.
Speaker 5: We're housing affordability is a real issue in New Zealand,
Speaker 5: really trying to start light on how hardened is going
Speaker 5: to be fixed some of these problems going forward. We
Speaker 5: can't necessarily just build our way out of their housing
Speaker 5: affordability issue.
Speaker 1: And do you think it's quite important because we obviously
Speaker 1: need more houses.
Speaker 2: We've been told that for it feels like decades now
Speaker 2: that we need to keep building houses.
Speaker 1: We need houses, houses, houses.
Speaker 2: But is there a fear that if you try to
Speaker 2: go as quickly as possible then you end up with
Speaker 2: shoddy work.
Speaker 5: It's about right sizing. I think for me, it's more
Speaker 5: of an issue when you have these large swings and
Speaker 5: activity rather than the share amount of houses that we
Speaker 5: need to build. If we can consistently deliver a pipeline
Speaker 5: of say forty thousand new houses a year, the industry
Speaker 5: is skilled and has capability and capacity to do so.
Speaker 5: What we can't do is suddenly decide that we need
Speaker 5: to build fifty thousand houses then come down to thirty.
Speaker 5: That's where you start to lose those skills or that
Speaker 5: ability to get through the sharer number of houses that
Speaker 5: we need to and that's when workmanship issues can start
Speaker 5: to show up.
Speaker 1: Thanks for joining us, Matt, Thank you for having me.
Speaker 2: That's it for this episode of the Front Page. You
Speaker 2: can read more about today's stories and extensive news coverage
Speaker 2: at enzdherld dot co dot nz. The Front Page is
Speaker 2: produced by Ethan Sills and Richard Martin, who is also
Speaker 2: our sound engineer. I'm Chelsea Daniels. Subscribe to the front
Speaker 2: page on iHeartRadio or wherever you get your podcasts, and
Speaker 2: tune in tomorrow for another look behind the headlines.