A close look at a recent report shows just how much demand is growing in Auckland and Christchurch. Auckland, in particular, faces a challenge in bringing sufficient homes to the market.
THE BUILDING INDUSTRY has been busy in recent months with rising demand for new housing and the Canterbury post-earthquake rebuild. This growth is expected to continue for another 2 years.
The National Construction Pipeline report (see Build 145, pages 82–83) shows a 28% increase from the previous peak in 2007 to an all-time high in 2017. This includes horizontal infrastructure – roads, bridges, ports, water and power generation – as well as buildings.
If we look at buildings only from that report, the projected increase is higher at 24% between 2007 and 2017. Both housing and non-residential buildings are expected to have growth over the next 3 years. The number of new dwelling units is forecast to be about 27,500 in 2016, up from 24,300 in late 2014.
Two cities dominate
At present, the two main centres – Auckland and Christchurch – account for 60% of new housing. The Auckland Housing Accord has a target of 39,000 new sections created and homes consented in the 3 years to September 2016.
At the time of writing, the Auckland region was tracking for about 9,000 houses consented and new sections created in 2014, so the implied target is 13,000 in 2015 and 17,000 in 2016.
This is a major challenge when considering that the previous peak level was about 12,000 new dwellings per year in the early 2000s for the Auckland region. The National Construction Pipeline report assumes a lower level of about 33,000 new housing unit completions over 3 years to mid-2017, though it is likely the available zoned and serviced land will be at the 39,000 target by the end of 2016.
For the Canterbury region, dwelling building consents are running at 7,000 for 2014 and are expected to increase slightly to about 7,500 for 2015, then decline to about 6,000 in 2016.
Waikato and the Bay of Plenty are the next largest after Auckland and Canterbury for new housing. They are forecast to be at approximately the same level for the next 2 years (see Figure 1). Wellington forecasts are for little change in current levels of starts.
Housing is the biggest chunk
Housing is the main sector for activity, with about $17 billion of work placed at its peak (see Figure 2). This includes all contractor work plus design, legal and council costs associated with the works. Non-residential is valued at about $7.2 billion at its peak in 2017.
As for housing, a major part of non-residential building work is in Auckland and Canterbury. Housing work put in place will grow about 4% per annum nationally over the next 3 years while non-residential building is projected to grow by about 7% per annum in the same period.
Articles are correct at the time of publication but may have since become outdated.