Auckland's housing shortfall will drop to zero by late next year, according to ASB economists.
And they say that the whole country will start to move into a surplus of houses being built during 2023.
What this means, they say, is that the "extremely high levels" of housing construction currently under way cannot be sustained without a large and sharp recovery in net migration over 2022 and 2023.
The ASB economists have added their voices to a growing number of observers calling an end to the Auckland, and NZ's housing shortfall.
In an Economic Note updating the housing situation, ASB senior economist Jane Turner says with new dwelling completions now outstripping new household formation, NZ was able to finally able to materially reduce its cumulative housing shortage over the past year.
"As we predicted early in 2021, NZ’s cumulative housing shortage shrunk from around 60,000- 65,000 in June 2020, to 40,000-45,000 in June 2021.
"We forecast this shortage will fall to around 20,000 dwellings by June 2022 and the shortfall is likely to become a surplus over 2023 (i.e. there will be more dwellings than households assuming an average household size of 2.6 people)."
Turner said recently updated regional population estimates from Statistics New Zealand (June year 2021) revealed large shifts in internal migration with strong population growth in the regions over the past year, while Auckland recorded a decline in its population.
"NZ’s closed international border has choked off population growth into Auckland and, coupled with very high rates of housing construction, has allowed the Auckland housing shortage to reduce at a faster pace than we expected. The fall in the housing shortage has been nationwide, but over the year to June 2021 this fall has been larger than we had expected in Auckland (with the decline in the shortage smaller than expected outside of Auckland)."
In terms of the Auckland housing shortfall therefore, Turner said she believed Auckland was still undersupplied by around 20,000 houses as at June 2021.
"...But this shortage will likely drop to under 10,000 by June 2022 and to zero at some point in late-2022."
Turner saw a "growing risk" that Auckland could become over supplied with housing in 2023.
"Whether this happens, or not, largely depends on how quickly NZ’s international border opens up over 2022 to permanent and long-term arrivals and how strong the recovery in net migration is over 2022. We are assuming a fairly conservative and gradual pick-up in net migration, so there is scope for population growth to exceed our forecast."
Turner said housing construction is now running at "extremely high levels".
"...And these levels cannot be sustained without a large and sharp recovery in net migration over 2022 and 2023.
"Once the NZ border restrictions are relaxed and home isolation of international arrivals is allowed, indicators to watch over the coming year are StatsNZ permanent and long-term arrivals estimates, rents and land prices for signs the balance of the housing market is shifting from shortfall to surplus."
65 Comments
What a stupid comment. This article mentions immigration increasing NZ's population. We can make the decision about immigration without sterilizing anyone.
The birth rate in NZ is either around or below replacement level for memory.
EDIT: 1.61 per woman in 2020. Well below replacement.
Well below replacement.
I don't know why people freak out so much when discussing population limits.
We don't need to sterilise people te kooti, we just need to create a society where people are unable or unwilling to reproduce more.
Think 21 year olds, right now, looking at house prices, global warming etc and making decisions accordingly.
GIve me a break, he/she said population growth not immigration.
It sounds like it's actually becoming a thing for the climate fruit loops
https://www.telegraph.co.uk/columnists/2021/10/31/women-sterilising-sav…
In case you've missed the discussions, or are unable to determine some of the subtleties population size is an important component of ensuring the environment can continue to support us humans. The article references internal and external immigration suggesting that the authors believe that economic success remains dependent on immigration. But the evidence is that immigration as a basis of economic growth is a false measure. In addition there is ample evidence that Auckland has already grown beyond what the local environment can support. Pollution for a start, but the biggest indicator is water. To sustain it's current population Watercare must pipe in water from the Waikato river, huge amounts.
Thus to present any argument that growth in Auckland is a need, is desirable or is even necessary is to deny the environmental impacts and resulting costs.
As to "climate fruit loops" - do you not believe that climate change is occurring and the consequences for our tamariki and mokopuna will likely be devastating?
That’s pretty much the definition of a city: it consumes more resources than available on the land it occupies. So what if Auckland imports resources from a hinterland? Only 1% of NZ’s area is built-up.
If water was priced appropriately, there wouldn’t be an issue. Maybe wall-to-wall dairy and lush gardens in Parnell aren’t sustainable, but this is no reason to limit population.
I'll put my money on older, well-located, weatherboard homes - that best withstand the forces of nature (e.g. earthquakes and climate change).
Looking around, many new houses these days are built from synthetic materials, with less than acceptable standards of workmanship. They will soon become an eyesore - and a costly burden for future generations.
TTP
Most predictions are as bad as the weather forecast.
Desirable location, neighborhood, schools and type of house all play a part not about just building enough houses.
Be very careful with the new builds (quick builds), with short supplies of materials and rush jobs, we might potentially see “leaky home 2.0” within the next decade.
Hopefully surplus will happen before that, but this just shows how overestimated and over-represented housing shortage has been on the media where some were talking about decades until this would happen. Many interested commentators pushing people into making stupid decisions based on FOMO should be held accountable now that all their lies about shortages have been exposed.
It's already oversupply mate.
In NZ no one is getting younger. Old will move to rest houses or god forbid under ground. Young should leave this country as soon as possible for better opportunities.
Middle aged can buy all houses and sleep one night of the week in a new house they bought with their equity to become multi millionaires.
As did I. I keep getting told TOP was a wasted vote but I have swapped around main parties as they promise to do something about the corrupt housing market - yet don’t. The main parties are the wasted votes, they are in too donkey deep with their ‘funders’ to ever upset them.
This is an extreme level of Bullsh*t, how someone can be this incompetent and low on IQ and still call himself an economist.
If there will be no shortfall then prices should go down and it does not seem to happen in NZ as we will always have "sustainable growth" assured by our PM.
Turner's point is that there is a risk of construction slowing due to supply catching up, unless immigration picks up. I think it is a fair point and could well happen if immigration does not pick up. However, I think it is much more likely the floodgates will open and those giving up and leaving will be outnumbered by those with a hope and dream.
She is not talking about house prices.
Regardless of immigration, building will slow, due to demand grinding to a halt, a result of increasing interest rates, unaffordable prices and soaring construction costs.
There's also a very strong correlation between rises in interest rates and a slowdown in house price growth AND home building.
Any economist worth their salt would be discussing these things as well.
Pain will start to hit consultants, who are at the front end of the process, from mid 2022. The pain for builders and tradies will hit later, perhaps from late 2022 or early 2023. Forward workload for the next 6 months is good for most.
Short memories eh government just approved 165000 plus extras as new residents but obviously these don't count extra is required to top up this low number to keep housing going , so how many are needed 500000/year if not how many stop talking in general figures be precise. And how is the infrastructure going to be built and paid for just building houses doesn't make sense .
The grand and predictable stupidity of it all. The stronger the bubble, the bigger the overshoot -- once prices have detached from incomes (which they did here years ago) overbuilding can continue for quite some time, as the demand is not based on real rental yield but extrapolated capital gains. You can plonk an extra 50,000 properties down from the heavens and not lower the average selling price, in the middle of a frenzy. When you break the relationship between actual utility and price on the way up, it stays broken until you hit the bottom on the way down.
Quick man the pumps! immigration not running at 100,000 a year terrifies the banks. The thought of rents dropping because we have more houses than people just will not do.
Our economy is, importing more people. Its great for the environment, its sustainable, forward thinking and all the infrastructure is all ready in place. Living in NZ is just getting better and safer too. Lets do this!
Yeah but have you seen what they are building, whole suburbs of white boxes with black roofs, mostly the same, using questionable materials at top dollar pricing. These will degrade and fall in value bringing down the median price but the solid houses with some character and land will hold up, thats what most people with money want not a chillibin box with the neighbours in your face. Nz population denisity has plenty of upside over the long term.
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