Construction in Greytown. PHOTO/FILE
Building a house in Wairarapa is getting increasingly difficult. The dragging supply chain and price hikes hitting the construction industry are tipped to continue, with people advised to plan well ahead and expect lengthy delays.
In a move likely to make the path to homeownership more difficult for many, the Reserve Bank on Wednesday lifted the Official Cash Rate to 0.5 per cent.
Although the move was expected, higher interest rates will put further pressure on mortgages and building costs.
In a supporting statement, the Reserve Bank said the rate hike was to continue reducing the level of monetary stimulus to help maintain low inflation and support maximum sustainable employment.
Economists expect further hikes into next year. After the central bank’s announcement, ANZ immediately lifted its floating mortgage rates by 0.15 per cent.
Greytown-based Paul Southey from Wairarapa Master Builders said the issues in the construction industry were unprecedented.
“It’s unbelievable. I’ve been in this industry a long time, and I’ve never seen this,” he said. “This is the new normal, so we have to change with it. People should prepare for rising prices and delays.”
Southey described an industry affected by a global and national squeeze. Building essentials from gibbing to Pink Batts and fencing were delayed, and prices were rising monthly.
He said manufacturing in Auckland was not up to speed operating at level 3, and goods coming from offshore faced significant logistical problems. There were delays at arrival ports.
“What would have taken two to three days to manufacture at level 1 will take two to three weeks at level 3,” he said.
“Delays and issues are impacting everyone because transport and logistics are affecting getting stuff around the country. Even if we go back to level 2 because of the backlog of orders, it could be months before they catch up.
“Most of our products come from overseas.”
Price fluctuations had become the norm.
“Prices are going up every single month. The price quoted today may not be what is eventually paid,” he said.
Industry advice was to have no fixed prices and no timelines for new builds.
Southey said suppliers were under incredible pressure and struggling to give delivery dates.
“People can’t get answers about when their deliveries are coming. Customers are frustrated and are having it out on the supplier,” he said.
Builders, tradespeople and those doing projects around the house were impacted.
“Gib and Pink Batts are so delayed the supplier does not know when they are coming. Down the chain is the client of the builder asking why they haven’t planned for this,” he said.
Southey asked everyone to have patience.
“Please be kind to each other because everyone in that chain is under pressure. Every client is one of many across the country,” he said.
“Suppliers are asking people to be patient. This is a global issue. Many countries are affected by building booms.”
Southey said good planning and realistic expectations were vital, whether the project was a kitchen, bathroom, fencing or a major renovation or construction project.
“It is often impossible to give accurate timeframes,” he said.
The coming summer holidays were expected to add to the pressure.
Conor Kershaw, owner of Pain and Kershaw in Martinborough, has a significant and complicated earthquake strengthening and upgrade programme of his flagship premises in Jellicoe St under way.
“Our own project has largely gone very well so far. We haven’t had many delays,’ he said.
Kershaw said building firm Holmes Construction had used a range of techniques to get around supply issues.
“We have changed our building methodology to adapt to what is in supply and what is not.”
He expected the general backlog to clear eventually, but expected price rises were here to stay.
“We are seeing a lot of price rises from our suppliers. Steel, chemical, you name it, prices have gone up,” he said.
“I don’t see prices dropping, but I do see supply gradually improving.”
