"The number of consents issued in Auckland over the past year is well below the levels required to keep up with the estimated population growth. As a result, we expect the
housing shortage to persist over the coming years and keep house prices relatively elevated in the region," Leung said.
The housing shortages in Auckland and Canterbury mean that a substantial number of houses will need to be built and these two regions are expected to remain the key drivers of construction growth, she said.
In October, consent was granted for 1758 new houses and 133 apartments.
"As construction activity ramps up and place further capacity pressures on the NZ economy, this will likely flow through to a lift in underlying inflation.
"We expect this will prompt the RBNZ to lift the OCR in March 2014," Leung said.
Westpac senior economist, Michael Gordon agreed that while construction is storming ahead in Canterbury, progress in the under-supplied Auckland market remains slow.
"Consents in Christchurch City rose to 245 in October, easily a new record high. In contrast, consents in Auckland fell to their lowest level since March," Gordon siad
"It may be some time before policy measures to free up housing supply in Auckland bear fruit."
Registered Master Builders Federation chief executive Warwick Quinn predicted about 20,300 new residences would be built in the year to December.
But he was uncertain about numbers for the year to December 2014, saying LVRs and higher interest rates next year could take their toll and cut back the numbers.
October was traditionally one of the busiest months for new house building and Auckland and Christchurch continue to account for the lion's share of activity.
The effect of LVRs on new house building won't be felt until around April or May next year, Quinn said.
Master Builders has complained about the Reserve Bank LVR moves, saying it is hurting demand for new houses.
