Updated: Mar 12, 2021
Why New Zealand’s built environment needs a greater commitment to standardisation.
Recent media articles in Stuff have highlighted the many factors that can have an impact on new residential building costs from delays in the consenting process, labour rates, construction materials and of course the exponential increases in land prices over the last 10 years.
Earlier this year the global accounting firm Deloitte produced a Fletcher Building Commissioned report on the ‘Cost of residential housing development,’ which used four different types of houses to show that construction costs (e.g. building materials and labour) are very similar and in some cases cheaper between New Zealand and Australia. Interestingly, the Deloitte Report also concluded that 32% of the cost for a standalone house in Auckland is due to the cost of land and infrastructure while building materials only make up 19% of the cost. The cost of land is the single and biggest prohibitive factor that makes house prices unaffordable not the materials used to build it.
Other factors also have an impact on the cost of building in New Zealand. One of the unique factors that does make New Zealand expensive relative to some other countries is our obsession with bespoke housing design which adds costs and time to manufacturing. For example, having custom made kitchens, different sized and types of windows, doors etc all adds time and cost. Mass produced designs significantly reduce costs. What is not so well known is that New Zealand has over 80 frame and truss manufacturing facilities throughout the country using new innovations to enable homes to be built faster and more efficiently than ever before. Already some companies like Carters can produce a standardised home in a week or less using existing pre-fabrication processing.
Studies by the Building Research Association of New Zealand (BRANZ) in 2011 and 2013 and PrefabNZ demonstrated the potential value of standardisation and of prefabrication (off-site) construction. In the intervening period to date, however, manufacturing processes, new products and materials, environmental constraints, home efficiency norms and consumer requirements have all changed. The benefits to the supply chain of the development of greater standardisation in the provision of stand-alone housing and medium density apartment blocks and town houses would allow for lower cost production runs, especially in the areas of windows and frame and truss manufacture.
A reset KiwiBuild programme when it is announced has the potential to be a huge success and it can also ensure New Zealand’s unused manufacturing capacity and capability is harnessed –there should be no need to re-invest or re-invent the wheel in terms of pre-fabrication. A greater commitment to standardisation and adding automated assembly processes would mean that New Zealand’s frame and truss operators would be able to gear up to double existing production and provide rapid housing sooner.
The Government and the regulator (Ministry of Business, Innovation and Employment) can play a part in the standardisation process by ensuring that products used are fit for purpose and comply with the NZ Building Code and Standards. In addition, a streamlined consent and compliance process at Building Consent Authority level would provide surety to builders of rapid approvals and minimise the cost of this process for each home provided as a “standardised” build.
A further role for regulators is in setting streamlined requirements for resource consents and planning requirements for large scale developments which offer potential to maximise the benefits of standardisation through master planning of a development. This is intended to provide scale in construction. This would involve, for example, providing a builder with the capability to lay multiple slabs in one concrete pour rather than have the concrete pour take place one house at a time. This would take out significant costs from the build process but can only be achieved for the most part if the builder is contracted to build multiple houses on the site.
New Zealand has also seen a trend in construction procurement in recent years where design has been separated from the building process. This has led, in many cases, to poor outcomes because if design specifications are not followed. Invariably it can mean that materials like concrete, steel and wood will not perform as intended and may add more cost in the long run if these need to be replaced because of a risk to the safety and longevity of a building.
Now is the time to move the debate beyond the myopic focus on the cost of building products which we now know is not the real issue and rather what can New Zealand do to provide the supply of more standardised, quality and ultimately affordable homes using the manufacturing capacity and resources we already have.