The Hawke's Bay building industry should try to tough out the worst times on record, because there is more work coming than the industry can cope with, says Warwick Quinn, CEO of the Registered Master Builders Federation.
He was in Hawke's Bay recently for the local branch's AGM and told Hawke's Bay Today "a building tsunami is coming so we are worried about capacity. What we don't know is the timing."
The number and value of new dwelling units in Hawke's Bay continue to languish, according to the latest figures released from Statistics New Zealand.
Only $6 million worth of new dwelling construction were authorised in June for Hawke's Bay, a fall of 60 per cent from June 2010.
Napier recorded five new dwelling authorisations (down from 15 in 2010) and Hastings 24 (down from 28 in 2010).
Nationally new dwelling units authorisations were down 27 per cent on the June 2010, with the value down 29 per cent from $383 million to $272 million.
It was the lowest level of building activity in living memory, Mr Quinn said.
"We haven't built these numbers of new houses since the 60s when we had two million people - and we didn't keep records prior to that."
"Non residential work is still down and most people are predicting it will get worse before it gets better. But when it gets better it will be sharp."
He said Hawke's Bay had seen a reasonable amount of activity until recently, when it was the lowest it has ever been on a consistent level. "If you project the current trend for the rest of the year you can see you are going to be well below your general level of consents," he said.
It was good news for homeowners, he said. "If you are ever looking at doing something in your home, a renovation, an alteration or addition, do it now. This window won't last, it's great for the consumer: interest rates are low, land is cheap, margins are down, prices are highly competitive and builders will turn up. I've just spent a major amount of money on my house for those reasons. I know in two years time interest rates and prices will be higher."
He said the industry had limited capacity to cope with increased demand.
"We are currently building about 15,000 houses a year - 75,000 houses over five years. So we are structured to cope with that now. There is spare capacity in the system so we could probably lift that to 20,000. Supply won't be a problem and we can get people back into the sector to cope with an extra five thousand houses. But you add in Christchurch, the refurbishments that are required there, maybe 100,000. You add in the leaky buildings which is 20,000, possibly 40,000, which is currently two years worth of current building activity. You add in the building shortage in Auckland - some are saying it is as high as 40,000. We are talking as a benchmark potentially 40,000 new houses are going to be needed in New Zealand, but not for one year, but for five years in a row.
"Where are we going to get these people from? And these numbers don't take into account the non residential infrastructure work we are going to need, it doesn't take into account the rebuilding of Christchurch CBD
"They managed to get $42 million for training in Christchurch. But there is a real issue because there is not enough work for builders to take on new apprentices.
"It is one of the biggest issues we have in trying to react from a capability perspective. Trying to react is very difficult."
He said 25 per cent of existing apprentices left New Zealand for Australia.
He said the government had been "doing its bit" in the non residential sector. " Government demand matters - there has been little activity in the private sector."