Builders will fail to meet rising demand for houses: forecaster

The arrival of about 45,000 immigrants here over the next three years will lift the house-building sector, says business forecaster BIS Shrapnel.

It predicts 17,000 to 18,600 houses will be finished annually. However, BIS says this won't be enough to meet demand.

Official figures reported last week showed that 14,425 housing consents had been issued in the year to December, well down on the 31,423 houses at the peak during 2004.

Statistics NZ's latest figures showed the house-building sector slipping into a decline after a big recovery in the past few months. The number of housing consents issued during December fell 2.4 per cent compared with November but annually the number fell 23 per cent.

Consents were up since March but still much lower than about mid-2007.

Adeline Wong, senior project manager at BIS, said: "We estimate dwelling completions to fall to between 17,300 and 18,600 units per annum over the two years to 2010-11.

"This in no way meets our estimated underlying demand for housing which will average 29,000 units per annum over the same period."

This residential building cycle would peak at a lower level of activity than the last peak in 2004. The sector would be constrained by worsening home affordability because of rising mortgage rates and house prices. House prices would rise because of the tightening new housing supply over the short term, Wong said.

The North Island, led by Auckland, would drive the rebound in the next three years.