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Building Industry 2025 – The Challenge Continues
That’s my prediction for many countries still struggling to build affordably, profitably, and efficiently.
Should I end my post here, or should I elaborate? Well, in 2023 and 2024, I witnessed some productivity and efficiency gains in elements of the private sector – but very little change in the public sector. These gains came from pioneering companies addressing skills shortages and supply chain challenges by pivoting to off-site manufacturing – mainly panelized construction.
Many of these companies invested heavily in new equipment, new premises, and new—well, new to them – building methods and practices. But let’s remember: Europeans and Scandinavians have been building this way for decades, even over a century in some cases.
So why has it taken so long for this more advanced building method to spread to other countries around the world?
Profitable Companies Rarely Change
I might be unpopular for saying this, but many companies don’t look to change if they’re making a profit. I believe this is the main reason why over 99% of the building industry hasn’t changed their core house-building practices for over a century. The building industry is somewhat unusual in that it’s very rare to negotiate a fixed price on a completed building without a hefty contingency margin built in.
So what does this really mean for house pricing? Well, it’s a bit of the wild west really. You can set a theoretical price to your client but it is more than likely to increase, with excuses like we couldn’t avoid the: material cost increases, delays, bad weather, loss of skilled resources, mistakes, inefficiency, poor planning and procurement practices, to name but a few. Well obviously not all these excuses will be offered, but are usually a reality.
So many clients feel that they’re almost expected to get ripped off; it’s just a matter of by how much.
Here in Auckland, New Zealand, for example, our local building merchant sales rep told me how sad it was that so many small building firms were going out of business in 2024. Then, in her next breath, she mentioned that the building merchant company that she worked for had never made so much profit over the last few years.
So who is causing the high building costs? The supply chain, our inefficient building practices, land costs, consent fees, outdated building codes and standards, poor designs, bad product choices, or is it what we’re building? Yes, you guessed it, it’s all of the above and more, and we’re all to blame.
Fixing the Housing Crisis
We’re told that there’s a housing shortage in nearly every country, yet each country has a fair percentage of empty residences. The challenge is most simply can’t afford what we’re building and the banks are saying no.
Also, our population has become more resistant to living further away from our place of work. This is partly due to low investment in infrastructure around our cities, meaning that living in the suburbs isn’t as great as it once was, say, 40 or 50 years ago when commuting wasn’t such a chore. Infrastructure simply hasn’t kept up with our demographic requirements. Period.
Some financial commentators are saying that we need much bigger populations to help solve the enormous world debt we’ve accumulated over the last few decades, so immigration policies undoubtedly don’t align with property availability.
So, to fix the housing crisis, I feel we need to address the following:
- Stop building for the sake of building; we need to focus on affordable housing. Again, there’s no point building what we can’t afford to buy.
- Collaborate – We need all our government departments to work together – not in work streams. They need to collectively look at where we can live and work comfortably. Incentivize (5 year tax breaks?) large employers like government departments, armed forces, and large corporations to move out of the main hubs so that we can persuade people to follow.
- Invest in infrastructure. Let’s make it easier to travel around our countries and create opportunities for small towns to prosper again.
- Accommodate more efficient building systems and practices in our building codes. Let’s make it easier and more affordable to build while maintaining – even improving – the quality and performance of our builds. The restrictions in many countries’ building codes are actually curtailing adoption and improvement. You could argue that these restrictions are also preventing many countries from increasing their own manufacturing capability and competitiveness.
Getting on The Housing Ladder
Many people are saying it’s almost impossible to get on the housing ladder, even well-paid professionals in their 40s.
I once thought that owning a home was essential to improving your security and wealth over time, but now I have doubts. I must admit I hated renting because we weren’t in control; our landlord could pull the rug out from under our feet at any time. But now, with housing so expensive and literally changing the way people live and work, I really have to question home ownership in certain situations.
The reality is many couples can’t afford to lose an income and have children, so both work to sustain their exorbitant mortgages.
I also notice many people aren’t willing to live two hours away from work just to buy more affordable housing. Even though I used to do that when I lived in the UK, I don’t blame people for not entertaining that concept now.
Public transport hasn’t kept up for decades, and our roads are simply not keeping up with increased vehicle use. But if suffering mind damaging commuting is the only way to get affordable housing, then I think its an option worth considering – especially if you’re young and desperate to get on the housing ladder.
My Top 5 Wishes for the Building Industry in 2025
- More people building their own homes. As long as you follow a set of strict rules, you can actually save a lot of money and get a better quality, higher-performing, and healthier house. For many, it can be one of life’s great achievements and a truly enjoyable experience.
- More builders adopting off-site manufactured houses. I believe that, done properly, they can build more houses per year with fewer resources and, importantly, be more profitable.
- Government departments collaborating to invest in local manufacturing capability and innovation. Many countries like New Zealand need to invest in their start-ups, help them grow and flourish; otherwise, as we’ve seen far too many times, this technology ends up in foreign ownership.
- A greater focus on healthier building products and education in the building industry. Our industry—designers and builders in particular—is oblivious to the health issues caused by toxic chemicals and materials that we use daily. These chemicals are causing life-threatening illnesses in our buildings, and this can be reduced easily. Remember, health is the only true wealth.
- Focusing on affordability and efficiency in our global building industry. It’s really possible to build efficiently and affordably without compromise; we just need the will to do it.
If you have something to say and would like to help make a difference in the building and construction industries, please consider becoming a guest author. If you have some exciting innovations or practices that you want to share, then also please make contact.
All that leaves me to say is good luck for 2025.
