New Zealand has produced a surplus of homes for the first time in eight years, but Kiwibank senior economist Jeremy Couchman said it “only nibbles around the edges of New Zealand’s huge shortage,” and it may take at least another three years to fully balance out the market.
An annual surplus of about 13,000 homes was recorded in March, though the overall national shortage still sits at about 67,000. Couchman said the lack of migrants had contributed heavily to the surplus, and builders have only just had a chance to catch up - and with the border still closed for the foreseeable future, he said that a balanced housing market is “now within reach.”
Read more: New housing rules could have unintended impact on first-home buyers
“The tide looks to have turned in New Zealand’s battle to defeat the housing crisis,” Couchman said.
“However, it’s far too early to pop open the champagne. The surplus only dents the shortage that has been built up over the years.”
“On the supply side, recent building consents suggest the pace of building will rise further over the year ahead,” he explained.
“On the demand side, population growth is the key driver, and the biggest driver of New Zealand’s population growth is net migration. But there is significant uncertainty around net migration forecasts, and hence the timing to the end of the housing crisis.”
One of the government’s major recent announcements included a $3.8 billion Housing Acceleration Fund, which aims to fund much-needed infrastructure and construction. However, Nest Home Loans director Jeff Kerwin said the government still needs to address the issue of the Resource Management Act, which has been a significant pain point for developers since it was introduced.
“The government has pledged $3.8 billion to help with infrastructure costs, and that’s certainly a good start,” Kerwin commented.
Read more: National calls on Labour to back housing proposal
“But I think they do need to iron out the Resource Management Act (RMA), which local governments still need to operate under, as that is one of the biggest hurdles for house builders at the moment. That hasn’t been addressed yet, and there was nothing on that in the latest announcement.”
“When it comes to demand for property, that is very much still going to be there,” he added.
“I think we are going to see a change in composition in that investor demand will start to reduce and first home buyers will start to increase, and that may have a netting out effect - but overall demand will still be the same. Getting that supply level with demand is therefore going to be very important.”