One of the country’s biggest home builders is warning about cost pressures, as suppliers lift prices amid a challenging sales picture for building companies.
Generation Homes said the sector faced price increases for numerous products, such as cladding, insulation, plasterboard and lining and flooring, with increases ranging from 3 to 7 percent – costs that would likely be passed on to home buyers.
Well-known products with price rises included Pink Batts insulation, which was up 4 percent, while James Hardie cladding was another signalling higher prices.
GIB plasterboard prices have also increased by 3.9 percent this year. Builders were first warned about the changes last year.
The increases came as demand for new homes remained weak. Buyers have stayed on the sidelines due to high interest rates.
Generation Homes chief executive Craig Hopkins said higher prices for those and other products meant the cost of a typical new-build house could rise by an extra $20,000-30,000.
He said while it wasn’t a huge percentage increase, the costs added up for house buyers.
“When you’ve got clients who are trying to work within bank ratios and LVRs (loan-to-value ratios) and all the rest of it, you’re adding another twenty-thousand to thirty -thousand dollars to a mortgage. It really starts to have an impact on them,” Hopkins said.
Fletcher Building, owner of the firms supplying GIB and Pink Batts, noted the latter recorded its first price increase in two years.
A spokesperson said lifting Pink Batts prices “was required” due to inflation pressures and “significantly increasing electricity costs”.
Fletcher Building said given the market conditions, “it would like to see stability in building supply prices”, but economic factors were also at play.
“A weaker New Zealand dollar increases the cost to bring goods into the country, including the raw materials we need to make products,” the spokesperson said.
“We are holding prices for as long as we can, but there will be times when we need to offset our cost-to-manufacture increases to ensure we can continue to deliver high-quality products.”
Another major supplier, Carter Holt Harvey, declined to discuss price increases, while James Hardie has been approached for comment.
Hopkins said he understood the cost pressures faced by suppliers.
“You sit here from our side of the equation going ‘hey, stop charging us more because it makes the houses more [expensive]’,” he said. And then you have the supplier, and they’re going ‘well hold on we don’t have a choice either’. It’s a tough one to balance out.”
He said competition would help the sector, but warned the government’s plans to bring products from overseas would probably not provide an immediate benefit.
“To bring product to New Zealand and then have a distribution chain around the country to be able to get that product out is not a two-second job, and it’s not a cheap job,” Hopkins said.
