21 Nov 2021

Commerce Commission investigating high cost of building supplies for residential housing.

6:55 pm on 21 November 2021

The government is reviewing the high cost of building supplies for the residential market.

Tools on building site

(file image). Photo: RNZ / Dan Cook

Minister of Commerce and Consumer Affairs David Clark says there have been long-standing concerns about whether there is enough competition in the sector.

Good housing underpinned a range of social, economic and health outcomes and it was critical New Zealanders had access to fairly-priced building supplies, Clark said.

"Understanding any market barriers could play a key role in supporting New Zealanders achieve home ownership, so I'm pleased the Commerce Commission will be getting this work underway.

"It's clear a significant portion of the costs associated with building residential housing is tied to building supplies. As New Zealand's population has increased over the last decade, residential building consents have more than tripled. Alongside that, current demand for renovations and extensions to existing homes is at the highest it's been in 15 years."

The Commerce Commission will present its final report on the issue in December 2022.

The commission will consider a range of issues including the following:

  • The industry structure for key building supplies covered by this study
  • The nature of competition for these key building supplies, including any industry pricing practices or acquisition requirements that impact on competition
  • Impediments to the entry or expansion of new or innovative building supplies, such as 'green' building supplies or novel prefabricated products.

The chairman and director of Combined Building Supplies director and chairperson Mike Blackburn said he was not convinced a quick solution will come from the investigation.

Trying to source material from overseas was the biggest struggle for the industry, he said.

If it can not find materials, he was not sure government would be able to find an answer.

Similar market studies found motorists are paying higher petrol prices due to a lack of competition while a study into the supermarket sector is due to be completed in March.