Auckland is 30,000 homes behind the 8-ball with the housing shortage continuing to worsen and the construction sector struggling to keep pace, Westpac economists say.
Since 2012, the region’s population growth has far outpaced the rate of building and is expected to grow by 300,000 over the coming decade.
Westpac Senior Economist Satish Ranchhod says housing all those people is going to be a tough task as Auckland already has a shortage of around 30,000 homes.
“Even if home building does rise to the required levels, Auckland's housing shortage is still going to persist for years to come. There needs to be a decade of strong building activity to address its needs.”
Despite roughly 11,000 new dwellings consented over the past year, building levels are still lower than what’s needed, he says.
“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.”
Another key constraint is a lack of skilled labour.
“Nearly 10% of the nation’s labour force is already employed in the construction sector, and we will need around 40,000 more construction workers and related occupations nationwide over the next five years alone. However, labour productivity has fallen and there are questions about whether we will have the necessary skills base.”
Satish says the Government’s new KiwiBuild program could help to support activity during slowdowns and an important influence on the type of houses that are built.
“But with the construction sector already constrained, its impact on the overall level of building will be limited in the short run.
“It’s going to get worse before it gets better. Population growth is expected will to 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.”