Building consents fall again, how can builders seize opportunities in a downturn? An experienced builder shares its views. A turning point may be approaching!

Since the beginning of last year, continued fluctuations in the property market have put the construction industry under downward pressure, as trends in building consent numbers reveal. According to the latest Stats NZ figures, new dwelling consents in April 2023 fell 26% compared with the same month last year. This was the third consecutive month in which new dwelling consents fell by more than 25% year on year.

 

Although the overall figures have declined over the past 12 months, trends vary across building categories. Consents for new standalone houses have fallen, but the number of multi-unit homes consented is still rising. In the year to April 2023, 19,138 new standalone houses were consented, down 23.2% on the corresponding period in 2022. Meanwhile, 26,824 multi-unit homes were consented, a modest increase of 4.1% on the previous year.

 

Stats NZ construction and property statistics manager Michael Heslop said:

“The trend in new dwelling consents peaked in early 2022 and has been declining since.”

 

Heslop said: “For much of 2022, falling numbers of standalone houses consented were largely offset by growth in multi-unit homes. However, in 2023, slower growth in multi-unit dwelling consents has contributed to a decline in the annual total.”

 

Faced with adjustments and challenges in the construction market, how can builders achieve sustainable business growth and help their teams stay positive? Today, we have invited Brian Liu, head of Cypress Construction, to share his views and experience.

 

Cypress Construction is a specialist company with many years of experience in land development, construction and project management. It is also a Master Builder member and a member of the New Zealand Chinese Building Industry Association (NZCBIA). Since 2009, Cypress Construction and its predecessor have developed and built a variety of projects across Auckland, gaining extensive knowledge of different housing types and particular expertise in townhouse developments. Its highly experienced management team provides professional services to clients and ensures high-quality delivery.

 

Discussing the current market challenges, Brian Liu was frank:

 

“With high inflation driving high interest rates, the construction market is facing a severe test. Global economic conditions also have a major impact on construction. In some respects, the current crisis is even more challenging than those in 2008 and 2018.”

 

“But opportunities always coexist with challenges. In 2023 and over the next two or three years, the property and construction markets will undergo a reshuffle in which the strongest survive,” Brian added. “Keeping a team positive and healthy depends on adjusting strategies promptly and managing risk so you can seize opportunities. For developers, this means changing development priorities, building more affordable housing, ensuring properties sell readily, maintaining sound finances and keeping cash reserves.”

375 Great South Road Greenlane project

Featuring James Hardie's Oblique™ Weatherboard and Stria™ Cladding paired with light-coloured exterior bricks

 

The project at 375 Great South Road, Greenlane, is one example. As developer and builder, Cypress Construction overcame numerous challenges to successfully deliver 8 high-quality townhouses. The development occupies a prime location in central Auckland, where land is at a premium. Cafés, restaurants and everyday amenities are close by, Cornwall Park is within walking distance, and medical facilities including Greenlane Medical Centre and Ascot Hospital are nearby. Public transport is also convenient.

 

 

A townhouse development here has considerable market potential and strong appeal to both first-home buyers and investors. Drawing on years of experience, Brian's team recognised the opportunity and designed the floor plans with both owner-occupiers and tenants in mind.

 

 

Anyone familiar with construction knows that developing in established neighbourhoods brings many challenges. As an established team with a decade of experience, however, Cypress Construction can handle them confidently and provide solutions.

 

Brian said:

 

“Because this was a medium-density development in an established area, neighbours had some concerns at the start of construction. Through proactive communication, we reached outcomes everyone was happy with on construction hours, driveway use, rebuilding boundary retaining walls and even the choice of fence paint colour. This demonstrated our respect for and understanding of the local community's culture. After the underground rock was broken up, many neighbours asked whether they could take some volcanic rock to decorate their gardens or build their own retaining walls, which also saved us some development costs.”

 

 

From a construction perspective, Brian also emphasised: “Careful, detailed management and greater use of proven products and designs are good ways to improve competitiveness.”

 

For this central Auckland project, the team chose a combination of James Hardie's Oblique™ Weatherboard and Stria™ Cladding. The choice reflected design and construction considerations as well as clients' future maintenance needs.

 

 

Discussing product selection, Brian said: “Improving project quality and the user experience has always been Cypress Construction's goal, and appearance is one of the most important factors in achieving both. To create a modern, dark-toned exterior, we used metal roofing, with fibre cement boards and bricks for the exterior walls.”

 

 

“James Hardie offers a wide range of products. Combining horizontal and vertical products in different widths with light-coloured exterior bricks gives the homes greater texture and layers of colour. Fibre cement products perform consistently, are less affected by temperature and sunlight, and have excellent fire and corrosion resistance. They also meet the low-maintenance requirements of townhouse developments.

 

Their production controls are very strict, which gives us considerable confidence. They also provide comprehensive product manuals, saving us substantial time selecting products during design and helping carpenters understand installation details accurately to ensure construction quality.”

 

 

James Hardie recently announced that the thickness of Oblique™ Weatherboard would change to 14mm, further improving compatibility with Stria™ Cladding. This creates more possibilities for vertical designs and makes accessory combinations more consistent and coordinated. Cypress Construction site manager Edwin said: “For companies like ours that regularly use James Hardie products, the change makes installation easier and reduces costs. It also helps subcontractors who are new to installing the boards get started more easily. We are very pleased to see JH considering things from its customers' perspective.”

 

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As Brian Liu said, risks and opportunities always coexist. Although the property and construction market is much quieter than it was immediately after pandemic lockdowns ended, some businesses are still finding opportunities, continuing to deliver good projects and building their capacity for the day the market recovers.

 

In fact, although building consent numbers are trending down, residential consents remain historically high compared with the post-global financial crisis trough of 13,236 consents between July 2010 and July 2011.

 

REINZ figures for May 2023 also show sales volumes beginning to rise in some parts of New Zealand. REINZ chief executive Jen Baird said:

 

“As we move into winter, we are seeing positive signs, particularly in some regions, supported by the Reserve Bank of New Zealand's announcement of looser loan-to-value restrictions and stabilising interest rates. Sales volumes rose in seven regions, signalling a return of market confidence.”

 

If you are interested in developing and building medium-density projects, contact the Cypress Construction team for advice. You are also welcome to follow James Hardie New Zealand's official WeChat account for more project examples and product information, or click “Read the original article” at the end of this article to find the exterior cladding system that suits your project.