Under-building not a nationwide problem

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Housing construction would need to double in Auckland over the next few years to keep up with demand but the construction industry is already keeping pace with growth in most parts of the country, Westpac’s economists say.

Tuesday, March 19th 2013, 12:00AM 1 Comment

by The Landlord

They have analysed housing supply in each region apart from Canterbury. Their report found Auckland had a big housing shortage and there was some evidence of underbuilding in Wellington, Hamilton and Palmerston North.

Everywhere else, there is no compelling evidence of underbuilding.

They worked out how many houses were needed based on a people-per-house measure and tracked changes in that measure over a number of years. Areas where the number of people per house was increasing were likely suffering a shortage in new building. The number should be gradually declining.

The average number of people per house ranges from 2.3 in Otago to three in Auckland.

Westpac’s chief economist, Dominick Stephens, said Auckland was building far too few houses to keep up with population growth and the number of people per house was increasing at a rate that was not sustainable. “The annual rate of new dwelling construction would have to double before we could say Auckland is building enough houses to keep pace with population growth.”

But Nelson might be building slightly too many houses. “Everywhere else, the current level of building activity is sufficient and there is little reason to expect a change in the rate of construction activity.”

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