Auckland’s nasty housing supply problem - whereby the city is short of around 30-40,000 homes at a time that it’s struggling to keep up with growing demand – is well known.
In a bid to confront the problem, the government has been front-footing its ambitious Kiwibuild policy with a slew of recent housing announcements for Auckland.
These include the plan to build 4,000 new homes on land procured from Unitec and a new 82 state housing development in New Lynn, along with a commitment to work with the city’s Mayoral Taskforce on Housing to better tackle the shortage.
This, in tandem with the visible signs of construction activity around the city, might lead people to think an end is in sight for the housing shortage.
But Westpac senior economist Satish Ranchhod says Auckland’s housing shortage has continued to worsen and the region needs a decade of strong building activity to address its housing needs.
His conservative estimate is that the region has a shortage of at least 30,000 homes but the population is set to grow by around 300,000 people over the coming decade.
“Home building in Auckland has been rising, with around 11,000 new dwellings consented over the past year, but building levels are still lower than what’s needed.
“Furthermore, the rise in consents likely overstates the additions to the housing stock as, with a push towards densification, many of the homes that are being built require the demolition of old ones.”
A shortage of skilled labour is increasingly acknowledged as a key constraint – even though nearly 10% of the labour force is already employed in the construction sector.
But Ranchhod says around 40,000 more workers in construction and related occupations nationwide will be needed over the next five years alone.
On top of this, labour productivity has fallen and there are questions about whether we will have the necessary skills base, he says.
“With the construction sector already constrained, the impact of the Government’s KiwiBuild program on the overall level of building will be limited in the short run.
“Nevertheless, KiwiBuild will still be an important influence on the type of houses that are built and could help to support activity during slowdowns.”
The upshot of this is that Auckland’s shortage of housing is going to get worse before it gets better.
Ranchhod says they expect that population growth will slow over time.
“But it will be several years before building levels catch up and even longer for the shortage of homes to be eroded.”
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