WEBVTT - Tradie issues and cost of builds revealed as new data shines light on building sector

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<v Speaker 1>Chielder.

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<v Speaker 2>I'm Chelsea Daniels and this is the Front Page, a

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<v Speaker 2>daily podcast presented by the New Zealand Herald. We've all

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<v Speaker 2>got an anecdote or story about a trade who did

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<v Speaker 2>us dirty or an issue with a new build.

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<v Speaker 1>Well, now we've got some actual.

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<v Speaker 2>Evidence around what's happening in the construction industry. The Building

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<v Speaker 2>Research Association of New Zealand has launched a new Build

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<v Speaker 2>Insights tool to provide accurate information on everything from trading

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<v Speaker 2>callbacks to new apprenticeships and the cost of new builds. Later,

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<v Speaker 2>we'll be joined by Brand's senior economist Matt Curtis to

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<v Speaker 2>talk through the broader economic picture. But first on the

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<v Speaker 2>Front Page ends At Herald, Head of Data Chris Knox

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<v Speaker 2>is with us to run through some of the key

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

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<v Speaker 2>the one thing everyone wants, the answer to which trady

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<v Speaker 2>do people call back the most to fix an issue

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<v Speaker 2>after they've moved in.

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<v Speaker 3>It turns out it's painters. Fifty percent of people of

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<v Speaker 3>new homeowners report that painters need to come back after

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<v Speaker 3>they've moved in.

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

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<v Speaker 3>Well, I'm not sure. This is not something I'm not

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<v Speaker 3>certain about. It could also be that they are impacted

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<v Speaker 3>by other people's work more so, like the painter might

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<v Speaker 3>do stuff and then you know, the electrician comes in

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<v Speaker 3>and cuts a new hole, and then the painter needs

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<v Speaker 3>to come back.

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<v Speaker 1>Oh right, right.

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<v Speaker 2>But on top of that, a growing number of people

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<v Speaker 2>are unhappy with their builders as well.

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<v Speaker 1>Hey, yeah, I was.

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<v Speaker 3>Quite surprised at the level of unhappiness with a builder,

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<v Speaker 3>particularly for a new build, where you know, I feel

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<v Speaker 3>like things should be a bit more I guess defined

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<v Speaker 3>or controlled than they are in a renovation. But yeah,

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<v Speaker 3>it looks like basically one in three people wouldn't recommend

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<v Speaker 3>their builder after they've completed a new build.

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<v Speaker 2>That's pretty concerning considering how many people are looking to

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<v Speaker 2>do building on their house, not even just a new build,

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<v Speaker 2>but just renoing the kitchen and stuff as well.

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<v Speaker 1>Hey, yeah, it's certainly.

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<v Speaker 3>I mean, I guess they were restricted by there's not

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<v Speaker 3>a lot of not always a lot of choice about

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<v Speaker 3>which builder you go to, But certainly, I think the

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<v Speaker 3>thing that sort of struck me from this data is

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<v Speaker 3>how much kind of more work I'd put into trying

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<v Speaker 3>to make sure that I was happy with my builder

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<v Speaker 3>before I got started.

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<v Speaker 2>There does seem to generally be some rising dissatisfaction with

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<v Speaker 2>new builds as well.

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<v Speaker 3>Hey, yes, yeah, I again, I'm not sure kind of

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

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<v Speaker 3>super happy after they've moved in, which you know, it

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<v Speaker 3>would be pretty gunning to put all that time and

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<v Speaker 3>money into a house and then not like it.

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<v Speaker 2>What's some of the data around that seems like a

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<v Speaker 2>really big thing is the level of communication between the

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<v Speaker 2>client and the builder.

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<v Speaker 3>So six only sixty two percent of people are actually

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<v Speaker 3>happy with the level of communication that they've had now,

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<v Speaker 3>which has dropped from kind of a peak of seventy

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<v Speaker 3>five about five years ago. And there's also people are

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<v Speaker 3>unhappy with completion time.

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<v Speaker 2>There is some positive news around the price of houses

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<v Speaker 2>and buying land though.

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<v Speaker 1>So it's not all bad news, is it.

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

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<v Speaker 3>In fact, brains reckons it's about the lowest it's been

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<v Speaker 3>in about three years, and the cost of land plus

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<v Speaker 3>a new build is about four percent down on what

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<v Speaker 3>it was, although on average about two hundred thousand dollars

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<v Speaker 3>more than buying an already existing house.

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<v Speaker 4>It's all very well government saying that they're going to

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<v Speaker 4>pop their finger on the scale and dictate terms to

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<v Speaker 4>how expensive a house is going to be. But the

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<v Speaker 4>reality is, as soon as they declare that they're going

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<v Speaker 4>to develop in a particular area, land values go up

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<v Speaker 4>and therefore costs go up. The market is what the

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<v Speaker 4>market is. It costs a particular amount of money to

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<v Speaker 4>be able to deliver a house or particular size and

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<v Speaker 4>particular location. That is the fact. You can't have it

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<v Speaker 4>both ways.

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<v Speaker 2>And for those people who aren't happy with their builders,

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<v Speaker 2>I suppose it's good news that there's more of them

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<v Speaker 2>joining the industry.

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<v Speaker 3>Yeah, there's been a really big search in the number

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<v Speaker 3>of people doing apprenticeships and other training related to trades.

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<v Speaker 3>It's nearly doubled in ten years, which I thought was

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<v Speaker 3>quite surprising.

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<v Speaker 1>Yeah, considering how.

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<v Speaker 2>Difficult it is to get someone out to your house,

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<v Speaker 2>especially on a weekend, I don't know if you lock

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<v Speaker 2>your key in, for example.

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<v Speaker 3>This sounds like it might not be hypothetical. I guess

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<v Speaker 3>another thing that maybe could be something we should be

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<v Speaker 3>looking at in the future is how many people are

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<v Speaker 3>training in new Zealand and then going and working overseas.

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<v Speaker 3>Potentially the construction detector might suffer from some of the

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<v Speaker 3>same dynamics that our other training sectors do.

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<v Speaker 2>Yeah, so we spend all of the time training you know,

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<v Speaker 2>plaster up here and then they go to Aussie and

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<v Speaker 2>get paid double.

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<v Speaker 1>That's that same old story.

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<v Speaker 3>I suspect that could be in play.

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

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<v Speaker 3>I was actually quite surprised by the variation and how

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<v Speaker 3>long it takes to get a consent done. So you've

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<v Speaker 3>got some councils that are getting have a medium processing

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<v Speaker 3>time of five days, which is essentially just a week,

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<v Speaker 3>and then other councils it's more like three weeks. And

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<v Speaker 3>then obviously it's a median, so there's a whole lot

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<v Speaker 3>more that are much higher than that.

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<v Speaker 1>Yeah, where's the worst place?

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<v Speaker 3>The worst place is whay Kado District Council, although Auckland

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<v Speaker 3>Council is the worst of kind of the large councils

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<v Speaker 3>and Carterendon is the place to where things happen really quickly.

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<v Speaker 2>Should there be some kind of regulatory framework that covers

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<v Speaker 2>the entire country or do we just leave it up

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<v Speaker 2>to the councils individually to sign off on these things.

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<v Speaker 3>I mean, this is a, I guess, a politically charged question,

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<v Speaker 3>but I do my personal opinions. Sixty six different organizations

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<v Speaker 3>doing building consensus too many for a country of five million.

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<v Speaker 1>Thanks for joining us, Chris Norris, you are.

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<v Speaker 2>For a deeper insight into the new build Insights tool

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<v Speaker 2>and what it means for the wider economy. We're joined

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<v Speaker 2>now by Brand's senior economist Matt Curtis, So Matt, can

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<v Speaker 2>you give us some insight into why this tool was

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<v Speaker 2>created in the first place.

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<v Speaker 5>There's a lot of building related data out there that's

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

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<v Speaker 5>So what we thought was a good idea was to

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<v Speaker 5>really try and bring it all together in one source

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<v Speaker 5>for people to quickly reference and understand what's going on

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<v Speaker 5>at quite a high level. But it does bring together

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<v Speaker 5>a whole bunch of data from various sources that can

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<v Speaker 5>really show people at a high level what's going on

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<v Speaker 5>across the building and construction system.

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<v Speaker 2>Is there a bit of a move to limit anecdotes

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<v Speaker 2>and word of mouth spreading that could give people the

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<v Speaker 2>wrong idea of where the industry is at.

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<v Speaker 5>I think it's more about just providing that single source

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<v Speaker 5>of truth from a trusted and reputal source where we

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<v Speaker 5>can stop talking about what might be happening out there

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

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<v Speaker 3>On on the ground.

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<v Speaker 2>Right, So, looking into the data, new builds continue to

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<v Speaker 2>be expensive, what are the factors driving those costs?

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<v Speaker 5>A lot of the factors relate to how sticky some

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<v Speaker 5>of the pricing can be sections. For example, the purchasing

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<v Speaker 5>of land often has a long lag time between when

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<v Speaker 5>it's purchased and when it's finally brought to market, which

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<v Speaker 5>does mean that sections can't necessarily respond to the drivers

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

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<v Speaker 5>where labor quite short supply. When demand for construction was

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<v Speaker 5>so high, it's really hard to then scale down label

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<v Speaker 5>pricing when things start to slow down. And then materials,

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<v Speaker 5>we had some supply chain issues, a lot of demand

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<v Speaker 5>for these building products and they went up at the

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<v Speaker 5>same time. It was almost a perfect storm there for

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<v Speaker 5>a little while during that sort of pandemic.

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<v Speaker 2>Are we seeing any improvement here, because we've been talking

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<v Speaker 2>about this since COVID so is there any light at

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<v Speaker 2>the end of the tunnel.

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<v Speaker 5>Yes, So we're starting to see land prices respond to

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<v Speaker 5>the fact that we're just not building to the same

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<v Speaker 5>extent as we were. Some of the medium density stuff.

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<v Speaker 5>We can build that at a cheaper price per unit,

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<v Speaker 5>then we can standalone, so that brings some efficiencies as well,

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<v Speaker 5>and materials are starting to slowly come back down. It

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<v Speaker 5>is a global market, and what we're seeing is that

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<v Speaker 5>demand internationally is starting to slow and therefore we're seeing

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<v Speaker 5>some of the price implications of that slow down flow

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<v Speaker 5>through to New Zealand.

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<v Speaker 2>So the construction industry is growing according to this data

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<v Speaker 2>eighty one one thousand, eight hundred and ninety one businesses

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<v Speaker 2>in twenty twenty four, but construction business liquidations were up

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<v Speaker 2>thirty seven percent as well and made up thirty one

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<v Speaker 2>percent of all business liquidations. What's fueling this boom and

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<v Speaker 2>I suppose bust At the same time.

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<v Speaker 5>It was a difficult time for the construction industry as

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<v Speaker 5>we sort of came out of the COVID pandemic. We

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<v Speaker 5>saw a lot of pricing that was put in pre

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<v Speaker 5>pandemic or pre supply chain issues that then was really

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<v Speaker 5>hard to meet when those price increases came through the system,

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<v Speaker 5>So there was a little bit of time at it

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<v Speaker 5>top of the industry to respond to those issues, and

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<v Speaker 5>that did pot some construction businesses in a hard spot.

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<v Speaker 5>What we're seeing now is that there's a bit more

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<v Speaker 5>pricing certainty in the system, able to better design and

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<v Speaker 5>build at the price points that they need to clear

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<v Speaker 5>these houses and buildings more generally, So we're starting to

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<v Speaker 5>see a system that's kind of starting to reset, rebalance,

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<v Speaker 5>come into the norm I think, and.

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<v Speaker 2>I guess there's a tendency for construction workers to be

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<v Speaker 2>more self employed. Hey, can that be difficult to maintain?

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<v Speaker 5>It can be difficult to maintain profit margins when it

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<v Speaker 5>really depends on how much work you've got going on.

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<v Speaker 5>So a building system or workloads that can be quite

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<v Speaker 5>variable can impact someone who's a solved proprietor you know,

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<v Speaker 5>they work by themselves a lot more than a large

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<v Speaker 5>construction firm, so it will be less resilient to those

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<v Speaker 5>fluctuations in the short term.

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<v Speaker 2>There's also data in this tool around trading callbacks and

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<v Speaker 2>how often roofers or painters are getting us to come

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<v Speaker 2>back and touch something up. What do you hope people

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<v Speaker 2>do with this information.

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<v Speaker 5>I just think it's a really good way for the

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<v Speaker 5>industry to start measuring what they're doing, understand the size

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<v Speaker 5>of the problem, and then think about ways that they

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<v Speaker 5>can improve it. I think it's important with some of

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<v Speaker 5>the defect stuff to kind of contextualize it as well.

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<v Speaker 5>A building is a very complex system of moving parts

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<v Speaker 5>are going and doing work sequenced, but you're relying on

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<v Speaker 5>someone who comes in before you to do a good

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<v Speaker 5>job to then come and do your piece. Sometimes secuencing

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<v Speaker 5>doesn't work. Sometimes something can come up after you have

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<v Speaker 5>completed your work that means that you have to come back.

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<v Speaker 5>So of our classic example here being painters coming to

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<v Speaker 5>do touch ups because someone might have dinged the wall

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<v Speaker 5>when they were moving something in or something like that.

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<v Speaker 5>So there are numerous factors that can actually lead to

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<v Speaker 5>defects on a building site, not just the quality of

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<v Speaker 5>workmanship from one trade to the next.

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

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

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<v Speaker 2>but it does matter what the person does before you.

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<v Speaker 5>Exactly, and as a system, it's good to recognize that

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<v Speaker 5>we all play a part towards a good quality outcome

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<v Speaker 5>at the end of the day, So tracking it as

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<v Speaker 5>a system is important, but also having those processes and

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<v Speaker 5>procedures in place on site that someone can take hold

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<v Speaker 5>of quality and be responsible for it. It's really important.

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<v Speaker 2>Well, do you think that we've lost that kind of

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<v Speaker 2>quality control aspect of building.

0:12:05.800 --> 0:12:09.720
<v Speaker 5>Not necessarily, it's just not something that's being done in

0:12:09.760 --> 0:12:13.439
<v Speaker 5>a conscious or considered way. Often you do need someone

0:12:13.440 --> 0:12:17.240
<v Speaker 5>who's ultimately responsible for delivering to that client, and sometimes

0:12:17.240 --> 0:12:20.000
<v Speaker 5>that can be lost when we do ramp up there's

0:12:20.040 --> 0:12:22.440
<v Speaker 5>a lot of activity going on. It can be difficult

0:12:22.480 --> 0:12:26.080
<v Speaker 5>to keep control of site to site rather than looking

0:12:26.080 --> 0:12:27.800
<v Speaker 5>at you everything that you're trying to build.

0:12:27.840 --> 0:12:30.360
<v Speaker 2>At the same time, there are some signs of more

0:12:30.400 --> 0:12:34.480
<v Speaker 2>apprentices coming into the industry, which is obviously a good thing.

0:12:34.640 --> 0:12:36.800
<v Speaker 2>But when you look at some of the data on

0:12:36.920 --> 0:12:40.720
<v Speaker 2>callbacks and growing dissatisfaction and businesses going under, do you

0:12:40.720 --> 0:12:42.760
<v Speaker 2>think we need to look a little bit more at

0:12:42.760 --> 0:12:45.319
<v Speaker 2>the standards or regulations or even training.

0:12:45.679 --> 0:12:48.600
<v Speaker 5>Again, it's not necessarily the case. I think it's important

0:12:48.720 --> 0:12:51.280
<v Speaker 5>that we have a strong influx of a prince's coming in,

0:12:51.520 --> 0:12:53.960
<v Speaker 5>particularly when we're sort of aware of what could be

0:12:53.960 --> 0:12:56.480
<v Speaker 5>coming out of the industry over the next few years.

0:12:56.480 --> 0:12:58.760
<v Speaker 5>We do know that we have an aging workforce, so

0:12:58.840 --> 0:13:02.000
<v Speaker 5>it's important to keep furnishing the staff so we've still

0:13:02.040 --> 0:13:04.559
<v Speaker 5>got the capability to deliver on everything that needs to

0:13:04.640 --> 0:13:07.360
<v Speaker 5>be built. It's just making sure that we're pairing our

0:13:07.400 --> 0:13:13.200
<v Speaker 5>apprentices with good experienced builders or trades so that they're

0:13:13.240 --> 0:13:16.040
<v Speaker 5>able to learn on the job to a satisfactory level.

0:13:16.360 --> 0:13:19.240
<v Speaker 2>And I guess from an economic perspective, it's not great

0:13:19.240 --> 0:13:21.200
<v Speaker 2>for us as a nation if we are spending a

0:13:21.200 --> 0:13:24.240
<v Speaker 2>lot more time and money on getting our houses fixed up.

0:13:24.280 --> 0:13:27.520
<v Speaker 2>The obvious example is the leaky building crisis, but more

0:13:27.559 --> 0:13:30.920
<v Speaker 2>recently we reported earlier this year on new builds in

0:13:30.960 --> 0:13:34.320
<v Speaker 2>Auckland overheating over summer just because of the way that

0:13:34.360 --> 0:13:35.199
<v Speaker 2>they're made.

0:13:35.679 --> 0:13:39.920
<v Speaker 6>The fundamental cause of the issue is the lack of

0:13:40.400 --> 0:13:44.680
<v Speaker 6>requirement to consider overheating in the building code and how

0:13:44.760 --> 0:13:49.600
<v Speaker 6>that comes to reality is a lot of overglazing. We

0:13:49.760 --> 0:13:54.280
<v Speaker 6>focused a lot on the view and getting daylight into

0:13:54.440 --> 0:13:56.960
<v Speaker 6>homes and that is a good thing, but we tend

0:13:56.960 --> 0:13:59.920
<v Speaker 6>to overglaze a lot of our houses and we don't

0:14:00.240 --> 0:14:01.520
<v Speaker 6>have adequate shady.

0:14:01.960 --> 0:14:05.000
<v Speaker 2>And from I guess an even more micro level, My

0:14:05.080 --> 0:14:07.280
<v Speaker 2>producer had to work from home, for example, for a

0:14:07.320 --> 0:14:09.319
<v Speaker 2>couple of days last week because he needed to get

0:14:09.360 --> 0:14:13.520
<v Speaker 2>his curtain rail fixed and it actually took four visits

0:14:13.520 --> 0:14:16.160
<v Speaker 2>in total for the plastering and painting to be completed.

0:14:16.200 --> 0:14:18.600
<v Speaker 2>He then had to work from home, and that affects

0:14:18.920 --> 0:14:20.200
<v Speaker 2>productivity down the line.

0:14:20.240 --> 0:14:24.160
<v Speaker 5>Hey, exactly, there are numerous flow on effects two things

0:14:24.200 --> 0:14:25.960
<v Speaker 5>not being done right first time.

0:14:26.320 --> 0:14:30.200
<v Speaker 2>From the data that you've collected and in creating this,

0:14:31.040 --> 0:14:33.280
<v Speaker 2>what's something that stood out to you that may have

0:14:33.400 --> 0:14:36.400
<v Speaker 2>surprised you, shocked you good or bad?

0:14:36.600 --> 0:14:39.080
<v Speaker 5>I think that's something that I always find quite surprising

0:14:39.080 --> 0:14:42.040
<v Speaker 5>about this is just that difference between the cost of

0:14:42.240 --> 0:14:45.640
<v Speaker 5>buying existing home versus building something new, something that we

0:14:45.720 --> 0:14:48.040
<v Speaker 5>often think of as being a trade off in the system,

0:14:48.360 --> 0:14:51.480
<v Speaker 5>but that we're finding that actually that cost of frencher

0:14:51.520 --> 0:14:54.480
<v Speaker 5>can be upwards of two hundred thousand dollars at a time.

0:14:54.560 --> 0:14:57.360
<v Speaker 5>We're housing affordability is a real issue in New Zealand,

0:14:57.880 --> 0:15:00.360
<v Speaker 5>really trying to start light on how hardened is going

0:15:00.400 --> 0:15:03.040
<v Speaker 5>to be fixed some of these problems going forward. We

0:15:03.080 --> 0:15:05.800
<v Speaker 5>can't necessarily just build our way out of their housing

0:15:05.800 --> 0:15:07.040
<v Speaker 5>affordability issue.

0:15:07.120 --> 0:15:09.280
<v Speaker 1>And do you think it's quite important because we obviously

0:15:09.320 --> 0:15:10.240
<v Speaker 1>need more houses.

0:15:10.280 --> 0:15:13.640
<v Speaker 2>We've been told that for it feels like decades now

0:15:13.720 --> 0:15:15.520
<v Speaker 2>that we need to keep building houses.

0:15:15.560 --> 0:15:17.120
<v Speaker 1>We need houses, houses, houses.

0:15:17.160 --> 0:15:20.520
<v Speaker 2>But is there a fear that if you try to

0:15:20.560 --> 0:15:24.160
<v Speaker 2>go as quickly as possible then you end up with

0:15:24.200 --> 0:15:25.040
<v Speaker 2>shoddy work.

0:15:25.400 --> 0:15:28.920
<v Speaker 5>It's about right sizing. I think for me, it's more

0:15:28.960 --> 0:15:31.800
<v Speaker 5>of an issue when you have these large swings and

0:15:31.920 --> 0:15:34.880
<v Speaker 5>activity rather than the share amount of houses that we

0:15:34.920 --> 0:15:38.160
<v Speaker 5>need to build. If we can consistently deliver a pipeline

0:15:38.200 --> 0:15:42.120
<v Speaker 5>of say forty thousand new houses a year, the industry

0:15:42.160 --> 0:15:45.320
<v Speaker 5>is skilled and has capability and capacity to do so.

0:15:45.440 --> 0:15:47.680
<v Speaker 5>What we can't do is suddenly decide that we need

0:15:47.680 --> 0:15:50.480
<v Speaker 5>to build fifty thousand houses then come down to thirty.

0:15:51.080 --> 0:15:54.240
<v Speaker 5>That's where you start to lose those skills or that

0:15:54.320 --> 0:15:57.560
<v Speaker 5>ability to get through the sharer number of houses that

0:15:57.600 --> 0:16:00.480
<v Speaker 5>we need to and that's when workmanship issues can start

0:16:00.520 --> 0:16:01.360
<v Speaker 5>to show up.

0:16:01.560 --> 0:16:03.720
<v Speaker 1>Thanks for joining us, Matt, Thank you for having me.

0:16:07.960 --> 0:16:11.080
<v Speaker 2>That's it for this episode of the Front Page. You

0:16:11.120 --> 0:16:14.920
<v Speaker 2>can read more about today's stories and extensive news coverage

0:16:14.960 --> 0:16:19.000
<v Speaker 2>at enzdherld dot co dot nz. The Front Page is

0:16:19.040 --> 0:16:22.760
<v Speaker 2>produced by Ethan Sills and Richard Martin, who is also

0:16:22.920 --> 0:16:27.560
<v Speaker 2>our sound engineer. I'm Chelsea Daniels. Subscribe to the front

0:16:27.600 --> 0:16:31.200
<v Speaker 2>page on iHeartRadio or wherever you get your podcasts, and

0:16:31.280 --> 0:16:35.640
<v Speaker 2>tune in tomorrow for another look behind the headlines.