A steadier route to a later peak for Auckland house building might bring benefits both for the construction industry and first home buyers, Prime Minister Bill English says.
Responding to the latest MBIE National Construction Pipeline Report, English, like Building and Construction Minister Nick Smith on Sunday, trumpeted projections for nationwide house building over the next few years.
But, as David Hargreaves wrote on Monday, the figures for Auckland on their own look rather demoralising, seeing as we’re told the city needs 14,000 new homes built a year to keep up with population growth, and that MBIE has previously said the city’s shortfall might not be closed until 2030.
The 2017 pipeline report indicates building will continue to increase in Auckland, but that the expected peak in house building will now be 2019/2020 rather than 2017, which on current consent projections could come in below last year.
Speaking at his post-Cabinet press conference, English said the Auckland figures on their own shouldn’t be considered disappointing, despite the expectation that building activity won’t peak until later.
“This is the industry making its own projections about what houses are going to be built and they show a pattern of a higher peak a bit later, and building spread across the country,” he said.
He tried to argue this was good news for first home buyers. “What they need is more houses on the ground faster, and the construction pipeline shows that.”
Wouldn’t it have been better news if the peak was coming sooner? “Well, it’s, probably the industry’s running about as fast as it can, as they point out themselves,” English said. “The rate of increase has been pretty impressive for the last four or five years. And the projections confirm that that’s going to continue, but on a broader basis than just Auckland.”
“There are some capacity constraints in the industry, because it’s been increasing so rapidly, both on the people, building supplies [fronts] and also, anecdotally, some pulling back by the banks from the financing of developments that they think are a bit riskier.
“So, it’s not surprising. In the long run it’s probably not a bad thing – that you get not quite so sharp a peak and a longer, flatter profile of continuous work,” English said.
And that was good news for the 60,000 young people who would be leaving school in the next three or four months, due to the steady job prospects in the construction sector over the next five or six years, he said.
Even so, should we be confident that the projections could be hit, given this experience? “We have reasonable confidence in them. The industry itself takes into account the availability – the supply side, materials, labour – and they’re indicating this is what will happen,” English said.
“What’s important to understand about this is the sheer scale of it. For quite some time there’s been a lot of public discussion about whether enough houses can be built. I think people will be surprised to know what 200,000 houses represents, and that is, building Dunedin twice and almost Hamilton twice, over the next six years.”