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Building optimism in 2021

An award-winning Jennian Home in Masterton. PHOTO/FILE

Residential housing remains strong

Leaders of the Wairarapa construction industry disagree with forecasts of a nationwide decline in construction activity.

The National Construction Pipeline Report, commissioned by the Ministry of Business, Innovation and Employment [MBIE], projected that New Zealand would see a decrease in construction activity through to 2023 as a result of covid-19.

The report predicted that residential activity – the largest contributor of national construction – would be hit hardest.

According to the report, the value of residential construction would fall 43 per cent from $23.7 billion in 2019 to $13.4 billion in 2023, as banks tightened their lending requirements.

The forecast anticipated a decrease in new dwelling consents from more than 37,000 in 2019 to an average of 26,800 a year for the next six years.

“From a Wairarapa point of view, we don’t agree with those statistics,” A1Homes Wairarapa director Paul Southey said.

While building consents may not have gone to council yet, forward work and plans drawn indicated that the period 2021-2023 would be busier than predicted, Southey said.

Members of the Master Builders Association throughout New Zealand had also challenged the information, he said.

“All of the members across the country have good carry-on and forward work. Most of them are looking for bookings towards 2022 now.”

The residential side of the report was based on forecasts from the Building Research Association of New Zealand.

The report had considered the condition of the construction industry during the Global Financial Crisis but noted that the extent of the economic fallout of the pandemic was still uncertain.

“Despite the forecast, demand for residential housing remains strong at the moment,” John Sneyd, general manager of building system performance at the MBIE, said.

“There is a steady pipeline of demand, and latest data show new home consents are currently at a 46-year high.”

The number of new residential building consents across the three Wairarapa districts had almost tripled from 2015 to 2018, from 143 to 396. The value of consents had more than doubled from around $43 million to $139 million during this period.

From 2016 to 2017 was a period of significant growth in Wairarapa. The number of residential consents grew 74 per cent, from 223 to 389 consents. The value of consents grew from $74 million to $126 million between these years.

Gareth Norris, managing director of Jennian Homes Wairarapa, said that Wairarapa had held up better than many other regions during the Global Financial Crisis.

“In my opinion, we don’t get the high highs or the low lows,” Norris said.

“A lot of our market is driven from people moving from Wellington – be it for retirement, or an early change of life – and I guess that continues to happen even in a softer market.”

A1Homes had seen an increase in inquiries from people living outside Wairarapa since the covid-19 pandemic, Southey said.

“Wairarapa is very attractive, because it is still close to Wellington, and we’ve still got land and space available.”

While councils had been proactive in promoting the region, Southey said they now needed to ensure that infrastructure could keep up.

“Front foot it. Let’s make our little region grow.”

Norris said that while he could not predict what would happen beyond the next two years, he was optimistic.

“My experiences have told me that Wairarapa is probably a safer place to be when we do strike financial recession.”

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