Local businesses are seeing less demand for their services and an increase in projects being put on hold or cancelled altogether. Photo: 123RF
A new survey shows one in five builders are working at less than 50 percent capacity, as work dries, with the majority expecting things to get worse over the next year.
The EBOSS Builder Sentiment Report surveyed 650 local business, with 70 percent believing industry conditions would continue to decline over the next 12 months.
About the same number were seeing less demand for their services, with an increase in projects being put on hold or cancelled altogether and the smaller business and sole operators taking the biggest hit.
Managing Director of building consultancy, EBOSS, Matthew Duder told Checkpoint the report confirmed what he had seen in building consent numbers and anecdotal reports.
1 in 5 builders working at 50% capacity
"Starts are down 64 percent from last year, project inquiries are down about the same amount as well. Some of the concerns here for builders is that they're finding it harder to line up work, so they operate on tight margins," Duder said.
He said it was a good opportunity for anyone considering a renovation or a new build in the next 12 months.
"You're able to get the architect and builder that you want when you want them, we've got building product pricing stabilised, labour's very competitive and with interest rates forecast to decrease, I think the key message here is that this capacity, we have not seen for the last five years," he said.
"I think if people are already in their place and looking to add value, the renovation market surely can benefit from having good able people available and probably at a price that we haven't seen over the last couple of years."
However, for construction businesses, there would be challenges.
"The report tells us maintaining a building construction business over the next 12 months is going to be challenging," he said.
Duder said the construction industry had seen a large increase in the cost for building materials over the last two and a half years.
"Maintaining profit margins are going to be more difficult over the last 12 months. There are going to be people around who will be looking to put in sharper pricing over the next 12 months to meet the market," he said.
All research he had seen around profit margins for the construction industry had always been modest, he said.
"I wouldn't want to speculate it's been price gouging over the last period of time when demand has been strong. Looking forward, people will be able to get the type of work they want when they want it, so I think that's good news for those who have been sitting and watching for a while," he said.
Duder said regarding concern expressed over the government's willingness to accept overseas certifications of some building products, some details should be looked at.
"Overall, the feedback from builders and we actually interviewed architects is that there's genuine support for opening up the supply chain possibilities.
"However, there's some detail that needs to be looked at, the feedback is 'let's consider lights and tiles, different from cladding and structural elements, so some of the elements with smaller performance requirements like tap wear and toilets may be suitable for a lower level of scrutiny than the likes of windows, or weather boards."
The government's new proposal around granny flats was a vote of confidence for the industry, he said.
"I think the government will take a lot of heart in this, that the industry is actually saying, look, we support the idea, and we actually think we've got the skills to be able to provide sign off and compliance without the need for councils.
"I think that's a vote of confidence in the industry that they're prepared to look at innovative solutions that actually drum up some more work for sure."