My Building Industry Insights From 2024

New Zealand’s Building Industry in Focus

What did the building industry look like in 2024? What did I learn, what was great, and what wasn’t so great? Let’s reflect on what many have called the worst year for the construction and building industries since the Global Financial Crisis of 2007/8.

For clarity, I’m going to reflect on New Zealand’s building industry, particularly the housing sector because that’s where I current live, but many of my points are relevant in other countries as well.

From my perspective, little has changed in New Zealand. Our productivity rates have remained largely constant at three hours of site productivity per person per day. This isn’t because we have a really lazy workforce – though some would argue differently – it’s because of the way we build. Our practices are inherently inefficient and outdated, and that is very hard to improve without changing the way we source our building materials and change the building systems we use.

Kāinga Ora’s Efficiency

Kāinga Ora, New Zealand’s housing department were under the spotlight for all the wrong reasons in 2023/24, particularly for extraordinary high spending over the previous government’s tenure, but a project I was happy to learn about was a project where they built (I think) 5 houses in 45 days from start to finish.

They did it by closely managing the procurement and product delivery schedule to the site. They essentially removed all the building product sourcing from the builders and made sure everything they needed was on-site before the trades started their day. This was efficiency in motion, but I would say that I can guess that the builders weren’t exactly happy because they missed out on the opportunity to “clip the ticket” on the product purchasing, after all, this is something that many trades rely on to make that extra margin.

So rinsing and repeating can work, but I would prefer to see better building systems being adopted as well because this will really drive greater rewards for their budget, and the occupier.

Real Estate

The real estate market is a good benchmark to gauge how well the building and construction industry is doing, and New Zealand’s real estate industry has had a very poor year, perhaps the worst since 2007/8.

Many real estate agents have left the bloated industry due to low sales and increased accountability and compliance. Those that remain are charging between 2% and 4%+ sales commissions, plus taxes, plus administration fees, plus advertising.

Perhaps controversially, I would like to deregulate New Zealand’s real estate industry, as I don’t see the value many agents offer – but that’s just my opinion. I sell my houses privately and save a lot of money and hassle in the process, so I’m not a good advert for the industry.

Can we implement GDPR in New Zealand and Australia’s Real Estate Industry?

In 2025, I would like to see greater data privacy around our property and personal data, including stopping real estate companies (and others) selling, or giving, customer listing data and media to 3rd Parties who use it to form market reports and valuations. The reason for this wish is a lot of this information is inaccurate, out-of-date, or misrepresenting a property.

Would this be allowed in GDPR complying countries?

Supply Chain

New Zealand’s newly elected government (November 2023) has inherited some less-than-attractive books left by the previous government, so many cuts have ensued in the civil service. But I think there’s room for more cuts too – particularly in MBIE (Ministry of Business and Innovation) where I struggle to see them pushing the changes and innovation the building industry desperately needs.

Christopher Penk (MP), who currently holds the building and construction portfolio, announced some new policies in the hope of broadening the scope of building products and lessening the grip of our monopolistic supply chain. But my thoughts are this: if New Zealand’s councils cannot get behind these policies and be educated in the merits of accepting better and more affordable products from other countries, then I feel the status quo will remain. Good try though.

It seems to me that many existing suppliers here in New Zealand are worried about more supplier competition because they are voicing concerns over the quality of imported foreign products. Here’s the reality: New Zealand is a small country with a limited manufacturing base; many distributors already sell imported products.

Let’s take the joinery (windows and doors) industry in particular. There are many companies and clients importing European-made joinery, yet there are no offshore companies or clients buying New Zealand-made joinery. Why is this? Because the quality of New Zealand made joinery is questionable and the price is extraordinarily high. I’m sure I will upset some readers with that statement, but that’s my 20-odd years’ experience designing and building in New Zealand.

Building Code

There has been a lot of talk about our building code updates around the requirement for better insulation and airtight homes. I see the arguments for and against. Yes, homes should be designed in a way that harnesses greater energy efficiency and health, but the reality is that there is no provision in the building code for air changes, air circulation, and management. So if the moisture in our homes can’t escape, then we are heading for a very big issue over the next few years.

For example, I’ve seen brand new homes with mold on the ceilings and walls.

Please Reduce Our requirement for Treated Timber

There are quite a few items that I feel are superseded in the building code and NZ Standards, but if there’s one thing I would like dropped more than any other, it’s the requirement to use treated timber throughout our builds. This, for me, is a biggie because it makes it really difficult for more advanced building systems to be adopted in New Zealand without hiking up the costs so much that it makes it unaffordable for most projects. A case in point would be mass timber.

Also, I have grave concerns about the high use of treated timber within our homes and the handling and cutting of treated timber by our trades. If we design and build properly, then surely we can drop this requirement and only use treated timber where it’s absolutely necessary.

It’s also worth noting that using treated timber the way New Zealand’s building industry does is banned in almost every country around the world.

Do We Really Have a Housing Crisis?

I have to question whether we have a housing shortage, as the press and many governments repeat on a seemingly constant basis. Do we have a shortfall, or do we have an affordability issue? I believe it’s the latter because I know that there are tens of thousands of empty homes in and around Auckland alone, and there are many housing developments with lots of stock available. So why are they empty? I believe the reason is that our housing stock is too expensive; it simply costs too much to buy the land and build – and then the banks won’t fund the purchasers because their debt-to-loan ratio is out of kilter.

We simply need to produce affordable housing; if we can’t, then there’s no point building it.

Artificial Intelligence

ChatGPT has been around for over two years now, and AI is certainly making waves in nearly every industry, but I feel that the building industry is going to be the last to feel any real impacts. Yes, I’ve seen some great work in the design space, even some in the manufacturing space, but I’ve not seen many companies trying to optimize their designs for affordability, quality, sustainability, and health yet.

I’ve asked ChatGPT some straightforward questions that I wanted building solutions for, and although some of the answers are okay, none have been mind-blowing yet. Perhaps it’s the way I’m asking the questions?

There are also some very bad answers that I hope will not be taken as verbatim by the reader because costly mistakes can be made, especially when LLMs like ChatGPT are guessing the result. My favourite LLM is Claude.ai.

Best Building Product

I’ve seen many new building products this year, but my favorite – and the one I will definitely use on my next house project – is actually an old product but new to me: ground screws. I think there is a great opportunity to reduce our concrete requirements in foundations by using ground screws.

They are really easy to transport and install. You are not constrained by weather, and there are a few design features I will take advantage of.

Check out my article on ground screws here: Are Ground Screws the Foundation Choice for a Sustainable Future?

I was Wrong about Sustainable Banking

I interviewed sustainability managers – or people with similar titles at two New Zealand-based retail banks in 2024. All of them said they were kind-of involved in development or mortgage funding, but not one of them knew what a sustainably focused building project is.

My perception, rightly or wrongly, was that their role involved a kind of green financing service within the bank that promotes and rewards building projects that fit certain sustainability criteria. I thought perhaps they might even knock a few basis points off for projects that meet specific building performance criteria. Well, I was wrong. It turns out their role was more about creating sustainability reports about the bank’s own performance, perhaps even addressing their ESG practices and responsibilities.

Even though these people were very kind to give me an hour of their time, I did feel as though the retail banks are missing a big opportunity here – to stand out from the rest. In my mind It would also be less risky for them to fund better quality buildings, and it would improve the finance industry’s rather poor image.

Biggest Disappointment of 2024

In two words: Auckland Council. Do I need to say any more? I’m not going to go into the specifics, but a group of us invested a lot of time and energy to get Auckland Transport – aka Auckland Council – to fix some land that was damaged by Cyclone Gabrielle and deemed unsafe. Auckland.

Our group presented at Auckland Council’s chambers, and they voted to accept our recommendations which was rare, but great news. We even found the money in a fund that they had that wasn’t being used to support the fix. A few weeks later, they went back on their agreement because they were worried a precedent was being set by them agreeing to fix the land areas in question, so we’re back to square one again.

Question for the day: Should Auckland Council be custodians of public land that they don’t maintain?

The Biggest Lesson I learned in 2024

I have been in and around building sites since the age of 16. I’ve worked on top of a 100-meter dam in the Pyrenees with no safety barrier, harness, or equipment. I’ve even worked in an SNCF tunnel without a helmet lamp. But this year, I’ve learned a lot about the dangers of the chemicals and particulates that we breathe on building sites – and in my case, in my own workshop.

Now, I wear a dust mask when sanding or cutting wood, and the difference is noticeable. Wearing the mask isn’t exactly convenient – especially when it steams up my glasses – but at the end of a long weekend in the workshop I really do notice the difference.

I’ll say that my approach to health and safety has also improved, especially when I’m fixing something on a roof. I used to spring up the ladder with little concern for my safety, but now that I’m of a certain age, I really don’t like heights. My knees seem to sense the problem before I do – they just won’t stop shaking.

Building Industry Hopes for 2025

Worldwide, there has been a lot of talk about climate change, sustainability, and the need for more housing. I think a few countries will meet their targets, and many won’t.

For some countries, it is incredibly challenging to hit many of these targets because of the way they currently operate, manufacture, and build. But for the more proactive countries out there – using off-site manufacturing, renewable energy, insisting on the use of sustainable and healthy materials, and having good urban planning policies will make it easier.

For the rest, I feel they need to perhaps stop, reset, and rethink what their countries, cities, and towns will look like in 10 or 20 years time if they keep the status quo. Will they like what they see?

For me, we made some amazing new partners and connections in 2024, and I hope that many of the projects we’ve been discussing will materialize in 2025 because if they do, we’ll be able to truly lead by example.

Best of luck to you for 2025.

Related

Kāinga Ora Website

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