Happy New Year to you all. I hope you had an enjoyable and restful break, and that the weather was kind wherever you were.
At the National House of the Year Gala Dinner, the Minister announced his support for the licensing of builders and got a rousing applause for his endorsement.
However, just prior to Christmas he was receiving mixed messages from the sector. I want to assure you that the RMBF fully supports licensing as an important mechanism to lift skill levels across the industry and, thereby, continue the lift in overall building quality.
We have reinforced our support for licensing to the Minister but accept that, over time, the regime can be refined and improved. The industry has worked hard on licensing over the past few years and to dismiss it now would be a backward step.
Volatile volumes continue to plague the construction industry. You will all be well aware of the drop off in new residential consent numbers over the past 18 months — the lowest since 1992.
Getting stability is paramount. Sure, it’s difficult but there are things the Government can do, including:
• stable immigration policies so we have a steady influx of immigrants,
• stable interest rates, and
• well planned Government capital expenditure programmes, not only on linear infrastructure (roads, highways, bridges, transmission etc) but in buildings such as schools and hospitals.
They can do other things too — review the RMA and Local Government Act so that territorial authorities can, and must, ensure sufficient development land can be held and released to meet the increased demand when it eventuates.
There is a lot of talk about affordability (or non-affordability), a significant contributor to which is the lack of land to build on.
It’s simple 101 economics — when demand for houses goes up you need to be able to build more of them quickly to meet the demand and stabilise prices. If this takes too long, and is too expensive, up go the prices.
The Government can also streamline resource and building consent processing, reduce compliance costs, introduce an energy efficiency rating to all houses so the market can differentiate efficient and inefficient properties, old and new, and place a real value on them (see the NZ Business Council for the sustainable development report Better Performing Homes for New Zealanders — Making it Happen).
This will drive an upgrading of our housing stock over time and stimulate the sector.
There’s plenty that it could do — the Government just has to have the will.
We can do things too — such as promote ourselves.
It is likely that in 2009 it will never be cheaper to build or renovate a house. The Official Cash Rate is now 3.5%, land values have fallen, margins are being reduced, and there is plenty of competition. But downturns don’t last forever!