The construction sector has been running hot for the past two years, with activity levels and consents at record highs. But that is unlikely to last, with operating and borrowing costs already up sharply, and house prices down.
In boom times, builders are often so busy working in their business that they don’t spend any time working on their businesses. They get away with it when work is plentiful, but once demand dries up, they’re scrambling to survive. And demand always dries up: residential building activity is notoriously cyclical, massively overshooting when the economy is on the up and undershooting when things turn sour.
Since the early 1990s, there have been five big upturns and four downturns, so if you want to survive in this industry you need to be prepared for both.
With another downturn on the horizon, what can Kiwi building companies do right now to help them survive and thrive in the years ahead?