New Zealand construction sector still playing catch-up despite new highs

Building consent data released today by Statistics New Zealand shows building consents are at their highest level since 2004. However, the industry needs to readdress the way it looks at skills training if it is to meet future demand.

To the year ending December 2016, 29,970 new homes gained building consents. This is the highest number since 2004 but still well below the high of 1973 when about 40,000 new homes were consented.

Almost all regions showed good growth particularly Manawatu/Whanganui (49%), Northland (43%), Hawke’s Bay (32%), Nelson (34%) and Otago (29%). Auckland fell just short of the 10,000 mark with 9,930 consents which was a 7% increase on 2015. The only regions to have negative growth were Southland (-1%) and West Coast (-17%).

Building and Construction Industry Training Organisation (BCITO) Chief Executive Warwick Quinn says he expects this upward trend to continue in 2017. Quinn says this rate of construction is at New Zealand’s long-running normal rate of 6.5 builds per 1,000 people and a response to the record low rate of construction during the global financial crisis (GFC). In 2011 the build rate fell as low as 3.1 builds per 1,000. Quinn says the number of homes that weren’t built during the GFC is double the number that weren’t built during all other recessions combined and New Zealand is still playing catch-up.

While the turnaround is welcomed, Quinn says 30,000 consents per annum is the new normal based on our population, but that level does not replace the shortfall developed during the GFC. He says New Zealand built about 45,000 fewer homes over the past 10 years compared to the previous ten, yet the population grew by about 480,000.

“It is no surprise to anyone that Auckland is the worst affected with about 4-5 years of backlog based on historical build rates. Other regions have significant backlogs as well including Bay of Plenty (3.7 years), Northland (2.7 years) and Tasman/Marlborough (2.5 years),” says Quinn.

Quinn says that while BCITO has a record 10,000 apprentices in training more are needed to meet building demand.

“While 10,000 apprentices is a new milestone for us it is also our new normal and must be increased if we are to successfully fill the skills gap in construction,” Quinn says.

“We tend to get a surge in apprentice numbers each year from about March and it will be interesting to see if that continues in 2017,” says Quinn. “Most of our growth comes from those firms that traditionally have apprentices, but in order to get the increase in apprentice numbers that we need, we also need to increase the number of employers who train. In order to do that we need to ensure training programmes align more closely with their business and meet employees expectations.”

BCITO has been working closely with the Tertiary Education Commission and the New Zealand Qualifications Authority in order to progress this. At the end of 2016 BCITO got the go ahead to pilot an alternative skills model that is aimed at increasing the number of firms that train and attract more people into the trades. Quinn says there has never been a better time to get into construction with a strong forward work projection and great job security.

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