Auckland’s housing shortage has got worse and will last for years yet, says a senior Westpac economist.

Writing in the bank’s Auckland Housing Market Conditions report, Satish Ranchhod says strong population growth and relatively low levels of home building in recent years have seen the housing shortage in Auckland rise to acute levels.

“For every 1000 people in Auckland, there are now around 320 houses. That’s down from 340 in 2013 and is a far cry from other parts of the country, where there are around 430 homes for every 1000 people,” he says.

Ranchhod believes the housing shortage in the Super City will be painful for some years yet: “Even assuming a pickup in home building, it will be several years before building levels catch up with population growth, and even longer for the shortage of homes to be eroded.” he says.

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“Record levels of net migration have seen population growth in Auckland surging to rates of over 2.5 per cent in recent years. In part, that has been due to an increase in the number of new arrivals from other countries.

“We’ve also seen higher-than-usual numbers of New Zealanders coming back from abroad and lower-than-usual departures of New Zealand citizens.”

Ranchhod predicts net migration and population growth will gradually ease though arrivals have levelled off and departure numbers are trending upwards.

“We expect that these trends will continue for the next few years, and they will be reinforced by a planned tightening in migration settings by the new government,” says Ranchhod. “However, this is an easing from very high levels, meaning Auckland’s population will continue growing at a strong pace for some time yet.”

The bottom line, says Ranchhod, is a difficult balancing act for both central and local government.

“Auckland needs to increase the rate of home building. But it also needs to ensure build quality and the resulting homes need to be affordable. Achieving all three of those aims simultaneously will not be easy.”

He says there will be an ongoing shift towards smaller and higher density homes, whose reduced footprint can help limit build costs.

“There are also likely to be related efforts to reduce costs and improve efficiency in the building sector, such as the increased use of prefabrication,” he says.

“There will still be the need for larger homes, and addressing the related challenges around housing affordability will not be simple.”

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