Residential building supplies announced as Government’s third market study

The study will allow the Commerce Commission to investigate any factors that may affect competition for the supply or acquisition of key building supplies used to build the major components of residential buildings.

This topic was chosen as the candidate of the study because of the importance of affordable housing to the wellbeing of New Zealanders, and indications of potential competition concerns in the sector. Building supplies make up a significant portion of the costs of developing new residential housing, and any improvements that can be achieved could have a significant impact for New Zealanders.

For the purposes of this study, the major components of residential buildings are those used in the foundation, flooring, roof, walls (structural and non-structural interior and exterior) and insulation. Residential buildings will include standalone houses to multi-unit dwellings.

This will be the third market study of its kind in New Zealand. It follows a study into the retail fuel sector completed in December 2019 which found that motorists were paying higher petrol prices due to a lack of competition, and led to the Fuel Industry Act. The second market study into the retail grocery sector is currently ongoing, with the Commerce Commission’s final report due in March 2022.

Background

Market studies help improve consumer outcomes in sectors where competition is suspected not to be working well.

The Commerce Commission will have the ability to commence the study once the Terms of Reference is published in the Gazette.

The matters to be considered in the building supplies sector study may include, but are not restricted to:

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

The Commission is required to publish its final report on the study by 6 December 2022.

Govt to review high cost of residential building supplies in market study(external link) — beehive.govt.nz

Find out more about the market study into residential building supplies