Renovations to keep builders busy

JAZIAL CROSSLEY
Last updated 05:00 22/02/2012

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Builders can expect a busy year ahead as an upturn in renovations helps offset last year's record low in building consents and delays in the Christchurch rebuild.

Economic consultancy BIS Shrapnel revealed in a presentation at Auckland yesterday that it expects home extension and alteration work to increase in value by 96 per cent next year, with some repair work undertaken in earthquake-stricken Canterbury but significant work also expected in Auckland on repairing leaky homes.

The value of alterations and additions in the North Island is expected to increase 28 per cent or $150m to $160m in the next year from the total $937,000 spend on the sector in 2011. Around 70 per cent of this year's increase is expected to be spent on remedial work for leaky buildings.

''This issue of leaky buildings has been on the horizon for some time but it's clearly a critical issue that could potentially impact upon activity in the alterations and additions sector, particularly in Auckland," said BIS Shrapnel managing director Robert Mellor.

While it forecast that construction activity would remain weak in the next two years, BIS Shrapnel's research also revealed it expected the lack of new builds in recent years could result in housing supply falling far short of demand.

Last year building consents hit the lowest level seen since records began 46 years ago, with only 13,662 homes including apartments consented in 2011.

The recent downturn in residential building consents issued and the rising population of Auckland could mean New Zealand will have almost 29,000 fewer houses than it needs by as soon as June.

Mellor said under-building was creating pressure on the market, particularly in Auckland.

''We would expect that deficit would continue to rise over the next three or four years because construction is not going to get above that underlying demand, certainly not in the next two years.''

Its forecasts showed New Zealand will have a housing stock deficiency of 31,450 properties by June 2013 with 24,230 of that in Auckland, dropping to 30,780 houses short nationwide but rising to 25,650 in Auckland mid way through 2014.

Resolving Auckland's housing shortage will depend on initiatives arising from Auckland Council's current work on the issue.

Mellor said there was desperation in the property market to get into inner city areas, with 27 per cent more houses sold in Auckland in January than a year earlier according to Real Estate Institute of New Zealand figures.

''This is a fundamental problem and New Zealand has been operating with a significant undersupply of housing for a long period of time,'' Mellor said.

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''If you don't get more construction, creating more supply for the demand, then you only create further potential risk of higher house prices down the track and also higher rental costs.''

- Stuff

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