This widespread pessimism underscores the urgent need for targeted interventions to stabilise the industry and prevent further decline.
If left unaddressed, this negative sentiment risks not only stalling the construction of much-needed residential dwellings but it could also prompt a potential exodus of skilled tradespeople seeking opportunities abroad. As one respondent in the report noted, "The lack of certainty is pushing good people out of the industry," highlighting the immediate need for solutions that can restore confidence and retain talent.
Why Build to Rent?
Build to Rent (BTR) offers a unique opportunity to address two pressing issues simultaneously: the shortage of affordable housing and the current lull in construction demand. The EBOSS report identifies a "softening market" as a major challenge, with the majority of builders expecting fewer new builds in the coming year. BTR developments, which involve constructing residential properties specifically for long-term rental, can provide a steady stream of quality housing for New Zealanders while keeping the construction sector active.
However, the economic conditions and prevailing uncertainty have made New Zealand less attractive to institutional investors who might fund these large-scale projects. By introducing targeted incentives, such as rebates on qualifying BTR expenditures or tax breaks for large-scale residential developments, the Government could significantly improve the financial viability of these projects. This would not only attract much-needed investment but also ensure that the building sector remains engaged, even during periods of economic downturn.
Preventing a talent drain
The EBOSS report notes 45% of builders are considering reducing staff numbers, a move that could lead to a significant drain of expertise from the industry. If domestic opportunities continue to dwindle, there is a real danger our most qualified and experienced workers will seek employment overseas, leaving New Zealand ill-prepared to meet future demand when economic conditions eventually normalise.
By incentivising BTR projects, the Government can help maintain a robust pipeline of work for builders and tradespeople. This, in turn, will keep our skilled workforce engaged and prevent a depletion of expertise that could otherwise take years to recover from. The long-term nature of BTR projects means that once established, these developments will continue to generate employment and economic activity, creating a more resilient property sector overall.
The challenges facing New Zealand's property sector are significant, but they are not insurmountable. The EBOSS Builder Sentiment Report clearly illustrates the depth of concern within the industry. By taking a proactive approach and implementing targeted incentives, the Government can help steer the industry through this period of uncertainty.
Incentivising Build to Rent projects represents a strategic investment in the future of both our housing market and our construction workforce. It is a solution that not only addresses immediate concerns but also lays the foundation for a more stable and prosperous property sector in the years to come.
