31 Oct 2014

Forecast puts housing target in doubt

11:28 am on 31 October 2014

The Minister of Housing has suggested there may be changes to Auckland's Housing Accord after a Government-commissioned report lowered its building consent forecast for the city.

Dr Nick Smith.

Nick Smith has responded to a lowering of official forecasts for new home approvals in Auckland. Photo: RNZ

The annual forecast now expects 4500 fewer houses to be built over the next five years, due to labour shortages.

The accord between the Government and Auckland Council to boost home building has ended its first year and the Minister of Housing, Nick Smith, was asked on Morning Report whether he would seek to re-negotiate it.

"I want to see the final numbers from both the Auckland Council and my ministry, that are due at the end of November, on the numbers and the progress that we're making."

Auckland's deputy Mayor, Penny Hulse, said the council would look at revising the Government's Housing Accord when it met with Dr Smith in a few weeks.

Ms Hulse said they would discuss changing the targets to reflect the struggles faced by the construction industry.

Widening gap between forecast and targets

The Ministry of Business, Innovation and Employment (MBIE) has lowered its forecast for new home approvals by thousands over the next four years.

The forecast, in the annual report known as the National Construction Pipeline, has been lowered right through the next two years of the Housing Accord.

The ministry now expects 61,500 home consents to be issued in Auckland in the eight years to 2019, which is 4500 fewer than it estimated last year.

It cited a shortage of skilled construction workers, with those who are mobile shifting to Christchurch to work on the rebuild.

Link to the latest National Construction Pipeline report

Direct comparisons with the Housing Accord are difficult, because that agreement also counts freshly-created but vacant sections.

However, the gap between the home consent forecast and the accord's targets widens over the next two years.

The Housing Accord, which counts each year from October to September, sets a target next year of 13,000 home consents and new sections. MBIE, meanwhile, forecasts about 9000 new home consents.

In 2015/2016, the third and final year of the accord, the target rises to 17,000, but MBIE is forecasting fewer than 11,000 new home consents.

Radio New Zealand News understands the Government is now more focused on home construction than section creation in the accord, which under the agreement is now due for review after its first year.

The accord is expected to reach its first-year target of 9000 home consents or new sections, even though the fast-track Special Housing Areas are only just producing their first completed homes.

Despite the lowering of MBIE's forecasts, its predictions are still a step up from the present levels of residential building consents in Auckland, which are running at about 7500 consents over 12 months.

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