Shortfall in housing ‘a disaster’
Official figures prepared for the new housing minister estimate a shortfall of 45,000 houses in Auckland, with the supply of new homes well behind increased demand.
They also show serious shortfalls in Hamilton and Wellington leading to a nationwide shortage of 71,000, with new minister Phil Twyford saying his government have ‘‘inherited a disaster’’.
The estimates, never publicly released, were included in a briefing for Twyford from his new ministry partially released to Stuff. It compares population increase with new houses actually built – not just consented.
In Auckland as of June 1, 2017 the Ministry of Business Innovation and Employment (MBIE) put the shortfall at 44,738 homes, following a huge growth in demand through 2013 to 2015 which a more gradual increase in completed new homes did not keep pace with.
In every year since 2013 the gap has been growing, with 9725 completed homes in the year to June 1, 2017 compared to a estimated increase in demand of 18,007.
The National government often rejected similar estimates made by banks and researchers.
Officials note below the estimate that ‘‘this shortage of supply relative to demand has contributed to a large growth in prices, as well as increase to rents’’. They also acknowledge this is one measure among many, and different assumptions about the size of households could show different results.
The nationwide shortage takes into account houses destroyed in the Christchurch earthquake.
‘‘We’ve inherited a disaster,’’ Twyford told Stuff. ‘‘This shortfall is one of the main reasons we saw house prices double on National’s watch – the average house increasing by around half a million dollars.
‘‘This is the legacy of the past government: spin and denial. I didn’t realise it was this bad.’’
The shortfall will prove to be a serious challenge for the new Labour-led Government, who have promised to dramatically increase housing supply.
If the Government were to build 5000 new affordable homes in Auckland over their first year – something they intend to do eventually as part of their KiwiBuild but don’t expect to manage soon – the shortfall would likely still be growing by thousands of homes a year.
Twyford said it wasn’t going to happen overnight but the Government would do their best to turn the deficit around.
‘‘On the current settings, officials have advised that the deficit wouldn’t be eliminated until past 2030. We’re going to do our darnedest to turn that around.’’
In February, former Prime Minister Bill English rejected an ANZ estimate that put the national shortfall at 60,000 homes as an ‘‘erroneous estimate’’ with estimates that put the shortfall at around 10,000 to 20,000 more likely.
’’It’s essentially an academic argument: what we know is we need to get more houses on the ground faster, and the councils are showing a will to go as fast as they can,’’ English said then.
In June, former Housing Minister Nick Smith rejected estimates of an Auckland housing shortage between 30,000 and 40,000 in Parliament, saying the best measure was price.
National’s new housing spokesman Michael Woodhouse said he hadn’t seen the numbers but it was ‘‘more hot air from Twyford’’.
‘‘If things were so bad, prices in Auckland and Christchurch wouldn’t be flat to falling,’’ Woodhouse said.
‘‘We are in the middle of the biggest building boom in generations and consents are reaching 13-year highs. Mr Twyford appears to be creating an alibi for when his KiwiBuild programme fails to deliver his promised 100,000 homes on top of the massive build programme the National Government already had under way.’’
Auckland has by far the worst shortfall in housing, but MBIE estimates deficits in other centres too.
Centres around Auckland like Tauranga and Hamilton have felt the squeeze.
Tauranga is estimated to be short 1473 homes while Hamilton is 5908 behind.
Wellington has the highest shortfall after Auckland and is almost 10,000 homes behind, according to this estimate.
Once homes destroyed in the earthquake are accounted for, Christchurch is estimated to have a 2500-home shortfall.