New Zealand Eases Restrictions on Overseas Building Materials

New Zealand is set to expand its construction sector by allowing more overseas building materials into the market. Prime Minister Christopher Luxon and Building and Construction Minister Chris Penk announced that a new building product specifications document will be released on March 11, 2024. This document will outline international standards for key products such as plasterboard, cladding, windows, and external doors.

The move aims to break existing monopolies within the industry, particularly in the plasterboard market, where New Zealanders pay significantly more than their international counterparts. According to Penk, prices for plasterboard in New Zealand are approximately 38 percent higher than in Australia, 47 percent more than in the United Kingdom, and a staggering 67 percent higher than in the United States. Currently, around 97 percent of the plasterboard used in New Zealand is manufactured by a single company.

Penk highlighted the impact of this monopoly, pointing to a crisis in 2022 when prices surged dramatically. Some builders reported paying up to six times the normal rate to complete projects, underscoring the urgent need for reform in the sector.

Opening Doors to Competition

The new specifications will facilitate the introduction of various high-performing products that have been tested against international standards. Previously, many of these materials faced barriers to entry because they had not been specifically tested against New Zealand’s standards. Penk stated, “This is just the beginning of our work to open the door to more building products, lower the cost of homes, and turbocharge the construction sector.”

Cameron Luxton, the ACT Party’s building and construction spokesperson, welcomed the announcement as a significant step forward. He noted that builders and tradespeople will now have the freedom to use materials that are trusted and approved globally. Luxton emphasized that increased competition not only benefits those opting for new products but also pressures existing suppliers to lower their prices.

Industry Response and Future Implications

The Registered Master Builders Association’s chief executive, Ankit Sharma, called the announcement a timely and practical reform. He expressed optimism that the changes would help reduce construction costs and improve the availability of products within the sector. “Builders across New Zealand have faced increasing cost pressures, and one of the biggest challenges has been delays or shortages in key building materials,” Sharma stated.

He added that allowing international products that meet established standards would enhance supply chain resilience, reduce delays, and ultimately facilitate the delivery of more affordable housing. Feedback from association members consistently identified access to building materials as a major constraint, and this initiative aligns with their calls for a more responsive system.

Sharma concluded, “Today’s announcement is a big step forward, and we support the government’s commitment to unlocking more affordable housing through better regulation.”

As New Zealand embarks on this significant shift in its construction landscape, the potential for increased competition and reduced costs could have a lasting impact on the industry and the housing market.