A top building boss says there are two fundamental issues with the construction industry and things need to change.

Bayside Designer Homes is the latest building business to fail, leaving nine Auckland housing sites unfinished, and homeowners in the lurch.

Naylor Love Chief Executive Rick Herd says one issue is the boom and bust cycles.

He told Mike Hosking the second is the fragmentation of the industry, with a lot of small operators which don't have strong balance sheets.

Herd says as soon as the cash starts to dry up, that's when they get into trouble, so he expects we'll see a continuing collapse of smaller companies over the next few months if not years.

LISTEN ABOVE