Making houses more affordable in Auckland will require far more land to be freed up after a new Government report showed an unprecedented construction boom that builders say will stretch the building industry to its limits.

The Construction Sector Report revealed that the industry was concerned about whether it had enough skilled tradespeople to meet the demand created by the rebuilding of Christchurch, housing demand in Auckland and leaky building repairs.

In releasing the Ministry of Business, Innovation and Employment report, Economic Development Minister Steven Joyce unveiled plans for a new $13.6 million school of construction based in Wellington to help increase the number of "work-ready" construction and engineering graduates.

Building and Construction Minister Maurice Williamson said the "huge wave" of work was expected to peak in 2016 and it was important that the building was done by trained professionals and to a high standard.


The ministry found that the construction workforce had increased by 30 per cent, or 10,000 firms and 32,000 workers, in the past decade. But many firms were small and had workers with low skill levels.

Masterbuilders Federation chief Warwick Quinn said the peak would put huge pressure on his industry.

"I am not optimistic we would be able to grow our sector fast enough - we'd have to import labour."

If labour costs were high and land supply was not increased to contain values, it would be difficult to create more affordable homes, he said.

"The key component around house prices ... revolves around urban containment policies."

If a developer was building on a $500,000 section in Long Bay, they had to build a $500,000 house on it to make the project pay.

"So if you can produce land at $100,000, you can put a house on it for $150,000 to $200,000."