Covid-19 might have provided a rare chance to reduce the countrys housing shortage but supply chain issues could mean some of the opportunity is lost.
Kiwibank economists said that, for the first time in eight years, the drop in population growth meant more new homes were built last year than the number of new households looking for them at surplus of 13,000.
Senior economist Jeremy Couchman said that left the shortage at 67,000 homes.
In the year to February, consents were issued for 39,725 homes, up almost 5 per cent on the year to February 2020.
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It took one crisis (Covid-19) to help alleviate another (a chronic shortage of houses). The closure of the border over 2020 occurred as residential construction was fast gathering pace, Couchman said.
Nevertheless, we look at the silver lining here. Covid-19 has provided a rare opportunity to make a meaningful dent in our housing shortage. Its an opportunity that still presents itself. We expect New Zealands border to remain closed bar a limited number of quarantine free travel bubbles well into 2022.
Based on our projections, New Zealands accumulated housing shortage will fall further this year and next. More importantly, we estimate that housing supply and demand could finally balance some time in 2024.
However, the outlook is highly uncertain. Future demand for housing will be dependent on our border fully reopening. And when the border does reopen, will there be a flood of arrivals or a hesitancy to cross borders? On the supply side, capacity constraints are ever present, and a slowing housing market may also take the heat out of home building.
ANZ chief economist Sharon Zollner said supply shortages were a threat to the supply of new homes.
Uncertainty about supplies could make developers more hesitant.
She said widespread shortages were affecting the construction industry, which could make developers more reluctant to start projects.
There have been reports of builders stockpiling timber in warehouses to ensure they have enough, amid concerns about a shortage.
She said she had heard of one project delayed for three months because of a delayed fire door, and there were delay son everything from plumbing supplies to electrical components.
There were some indications not as much building work had started as consents would suggest should have, but further data was needed to show a clear signal.
Supply pressures were also pushing up prices, she said.
Couchman said there was a longer-term issue because the supply of housing was too slow to respond to changes in demand.
The investment in new infrastructure isnt keeping up with the current rate of home building. And thats on top of the mountain of upgrades required to existing infrastructure. The Governments recent announcement of a Housing Acceleration Fund for local housing-related infrastructure is a welcome move. But, as we have already said, the $3.8 billion fund is merely a drop in a leaky bucket.
