Everyone is well aware that the NZ building industry has been through a few interesting years and here at eHaus we are starting 2024 with confidence and zest following the recent release of new industry research and data.
A recent history of the NZ building industry
Coming out of Covid, 2021 saw the continuation of the lowest ever NZ mortgage rates and a record year in residential building consents, and with it a shortage of key materials. Prices of timber, steel, board products, roofing materials, paint and even nails increased drastically nationwide. Small orders were cancelled to prioritise major clients and some work sites came to a grinding standstill.
2022 saw housing consents reach a monthly record in March and mortgage rates start to increase throughout the year.
In 2023 the building industry experienced a quick shift. Demand for new builds slowed, annual housing consents dropped for the first time since records began in 2014, and construction companies made up 29% of all business liquidations in January and February that year. It was a tough one!
Through those challenging years, eHaus remained steadfast, ensuring quality and performance even during those material shortages. You can read more about that in the Jetty House article.
2024, another year of change
Just as quickly as things turned tough, the good news is that the building industry is changing again. We are starting 2024 with confidence and zest following the recent release of new industry research and data.
Here's why we think 2024 is a great year to build a new home:
Prices for building materials have stabilised and, in some instances, dropped slightly. For consumers, this means committing to a new build has less risk and more price certainty than it did in 2021 when material prices were unpredictable.
Housing consents have dropped from the peak of 5,303 in March 2022 to 2,958 in November 2023. This means there is currently less pressure on the building industry for supply of materials, and builders’ workload is back to a manageable level. Gone are the long 6-12 month wait lists and consumers can now get their work started in a more realistic timeframe. As building projects and consents begin to increase, its inevitable builders and suppliers will become swamped again as we move toward another boom.
The latest Cordell Construction Cost Index (CCCI) has highlighted both of these points as well, stating “On balance, it wouldn’t be a surprise to see the annual rate of change in the CCCI run at 3-4% over 2024, with builders still busy, but not facing the intense pressure of recent years. In other words, for households potentially looking to buy a new-build or commission their own project, it’s unlikely to get any cheaper. But at least the cost won’t be spiking higher either.”
In her article on 15 January, writer Catherine McGregor discusses the UN’s World Economic Situation and Prospects report and economic outlook for 2024. “The UN report forecasts NZ will end 2024 with inflation at 3.4%, then drop to 2.6% in 2025. That’s less optimistic than Treasury, which is forecasting inflation back within the Reserve Bank’s target 1-3% range by the end of this year. As inflation drops, so too should we see falls in interest rates.” writes Catherine. Also in the article, David Cunningham of mortgage brokers Squirrel says “I would be surprised if we don’t see most fixed interest rates down between 0.5% and 1% by March.”
Election years are anecdotally slower in many industries, and the building industry has been no exception. Consumers tend to become more cautious with their spending in the lead up to elections. A new government brings steadiness and with it, a more positive mood for the building industry. In the months since the new government was formed, we have seen our enquiries pick up again, which is confirmation that things are heading in the right direction.
The CoreLogic House Price Index released on 17 January shows a third consecutive rise in average property values in December, and while CoreLogic NZ Chief Property Economist, Kelvin Davidson says 2024 will still have some ‘patchiness’, to us it is a sign that the market is shifting again. "A further rise in property values in December seemed almost inevitable given housing market sentiment has risen in recent months. This is off the back of several factors including the change of government, a peak - and even some falls - in mortgage rates, continued growth in employment, and soaring net migration," Mr Davidson said.
In conclusion, we see 2024 being a great year to build an eHaus. Building prices have stabilised providing more price certainty, mortgage rates have reached their peak and are expected to fall, and builders are not facing such intense workloads.
If you plan to build a new home in 2024, the timing is great. Beat the next building boom and reach out to us today, and let’s start the conversation about your dream eHaus project.
We believe all great projects start with a great conversation. Get in touch with us to get your eHaus project started with a free, no obligation consultation.
