Housing shortage forecast - New Zealand's source for business, stock market & currency news on Stuff.co.nz
Housing shortage forecast - New Zealand's source for business, stock market & currency news on Stuff.co.nz
Fears of a critical housing shortage have been raised as home building plunges.
With New Zealand's population rising while construction falls, a shortage of homes is expected by the second half of next year.
There are concerns the shortage could harm the economy and trigger another bubble in the housing market.
The number of consents issued by councils for new homes has dropped 42 per cent since mid-2007, reaching an eight-year low in August.
However, New Zealand still has more people arriving than leaving and more births than deaths, gaining 40,000 citizens in the past year, Statistics New Zealand figures show.
Bank of New Zealand chief economist Tony Alexander said a housing shortage was just a year away.
"We are going to be looking at a whole new debate about a housing shortage in late 2009," he said. "Construction is dropping like a stone."
He predicted the shortage of homes would be made worse as more migrants chose New Zealand to escape world financial turmoil.
He expected the fallout would copy the pattern of the aftermath of the September 11, 2001, terrorist attacks, with more arrivals and fewer departures six to 12 months later.
Lincoln University property professor Chris Eves said demand would build up as new housing stock dwindled, setting off the boom-and-bust cycle again.
"There's definitely going to be a shortage. It's a worrying sign for the future, and it's not just short term," he said.
"If we get into this rollercoaster of under-supply and over-supply again, it just makes the whole market volatile and we could have another bubble.
"What we really need now is a period of stability. These big peaks and troughs don't help anybody."
New Zealand's downturn in construction has followed the housing market slump that began midway through last year.
People have been less willing to build, with house values down about 6 per cent in Canterbury and the future of the market uncertain.
The credit crunch has made loans harder to get, with many banks now wanting a 20 per cent deposit on mortgages, and fewer developers are subdividing land.
Paul Williams arrived in Christchurch from Britain eight years ago and has a new house half-built in the hillside suburb of Mount Pleasant.
Williams said he was lucky to have funds from selling his previous home, otherwise he "would just be sitting tight now and waiting".
"Everyone is just battening down the hatches. They are putting it off to see what happens with the election and with interest rates," he said.
Building while things were quiet was ideal for those who had the money, he said. "You can get some really good discounts, and we've had no trouble getting people on site when we need them."
Master Builders' Federation acting chief executive Chris Preston said home construction was already down by at least 25 per cent on a year ago, and dropping.
The industry was a lot quieter than a year ago, when some builders had their diaries full 12 months ahead, he said.
Preston was concerned that any lay-offs of apprentices now would mean a skill shortage when demand for new homes picked up again, making a housing shortage worse.
Several house-building companies in Canterbury have already gone to the wall this year as work dries up, while timber processor Carter Holt Harvey axed 300 jobs at North Island sawmills this week.
A report from global property consultant Rider Levett Bucknall has forecast house building in Christchurch to continue dropping in the next six months, with Wellington in a similar position and Auckland worse off.
The Government yesterday announced a new plan to allow low-income people to build houses on Crown land in a bid to improve housing affordability.
Prime Minister Helen Clark said Home Ownership on the Public Estate (Hope) would dramatically lower the cost of a home, with 1500 sites to be made available over four years.
The Hope scheme was similar to one proposed by National, but under National's policy the homeowner would eventually have the chance to buy the land.
Its time for moladi in New Zealand
Fears of a critical housing shortage have been raised as home building plunges.
With New Zealand's population rising while construction falls, a shortage of homes is expected by the second half of next year.
There are concerns the shortage could harm the economy and trigger another bubble in the housing market.
The number of consents issued by councils for new homes has dropped 42 per cent since mid-2007, reaching an eight-year low in August.
However, New Zealand still has more people arriving than leaving and more births than deaths, gaining 40,000 citizens in the past year, Statistics New Zealand figures show.
Bank of New Zealand chief economist Tony Alexander said a housing shortage was just a year away.
"We are going to be looking at a whole new debate about a housing shortage in late 2009," he said. "Construction is dropping like a stone."
He predicted the shortage of homes would be made worse as more migrants chose New Zealand to escape world financial turmoil.
He expected the fallout would copy the pattern of the aftermath of the September 11, 2001, terrorist attacks, with more arrivals and fewer departures six to 12 months later.
Lincoln University property professor Chris Eves said demand would build up as new housing stock dwindled, setting off the boom-and-bust cycle again.
"There's definitely going to be a shortage. It's a worrying sign for the future, and it's not just short term," he said.
"If we get into this rollercoaster of under-supply and over-supply again, it just makes the whole market volatile and we could have another bubble.
"What we really need now is a period of stability. These big peaks and troughs don't help anybody."
New Zealand's downturn in construction has followed the housing market slump that began midway through last year.
People have been less willing to build, with house values down about 6 per cent in Canterbury and the future of the market uncertain.
The credit crunch has made loans harder to get, with many banks now wanting a 20 per cent deposit on mortgages, and fewer developers are subdividing land.
Paul Williams arrived in Christchurch from Britain eight years ago and has a new house half-built in the hillside suburb of Mount Pleasant.
Williams said he was lucky to have funds from selling his previous home, otherwise he "would just be sitting tight now and waiting".
"Everyone is just battening down the hatches. They are putting it off to see what happens with the election and with interest rates," he said.
Building while things were quiet was ideal for those who had the money, he said. "You can get some really good discounts, and we've had no trouble getting people on site when we need them."
Master Builders' Federation acting chief executive Chris Preston said home construction was already down by at least 25 per cent on a year ago, and dropping.
The industry was a lot quieter than a year ago, when some builders had their diaries full 12 months ahead, he said.
Preston was concerned that any lay-offs of apprentices now would mean a skill shortage when demand for new homes picked up again, making a housing shortage worse.
Several house-building companies in Canterbury have already gone to the wall this year as work dries up, while timber processor Carter Holt Harvey axed 300 jobs at North Island sawmills this week.
A report from global property consultant Rider Levett Bucknall has forecast house building in Christchurch to continue dropping in the next six months, with Wellington in a similar position and Auckland worse off.
The Government yesterday announced a new plan to allow low-income people to build houses on Crown land in a bid to improve housing affordability.
Prime Minister Helen Clark said Home Ownership on the Public Estate (Hope) would dramatically lower the cost of a home, with 1500 sites to be made available over four years.
The Hope scheme was similar to one proposed by National, but under National's policy the homeowner would eventually have the chance to buy the land.
Its time for moladi in New Zealand
