Massive shortage looming: Report

The report by the NZ Initiative estimates the country could reach a shortage of 113,800 houses by 2031. It says official figures underestimate the problem.

Executive director Oliver Hartwich says construction levels are much lower than officially forecast, with serious implications for the housing market. “The crisis is far more urgent than we think.  If we don’t build at least 113,800 additional houses within 20 years, we could see Auckland house prices match or even exceed Sydney levels within that time.”

Hartwich said it was the biggest crisis facing the country. “Unless we ramp up supply well beyond current levels, home ownership could be out of reach of most families within 20 years.”

The report’s figures are based on official projections for demographic change and population growth, and current construction levels.  They show New Zealand’s aging population is set to create a generational housing mismatch of empty nests and crowded houses.

“You’ll see more and more houses with one occupant while next door you’ll see larger numbers of people crowded together,” Hartwich said.

He said the German city of Cologne experienced similar demographic shifts between 2001-2009 to what official median projections indicate for New Zealand.

“Despite their population growing by only 1400 over that time, almost 20,000 new houses were needed to cope with the mismatch resulting from their aging population.  It was a hugely valuable lesson and New Zealand need to take notice. The solution is simple.  We need to build more and we need to build now.”

The report recommends creating development districts to finance construction, giving local government greater financial incentives, and reforming water provision as three steps toward addressing the shortage.