26 Mar 2014

Auckland building is lifting - bank

5:35 pm on 26 March 2014

House construction in Auckland is not keeping up with the city's population growth, but one bank's economists think the required building lift will happen.

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Photo: RNZ

Westpac Bank says over the last five years 13,640 too few dwellings were built in Auckland and more than 9169 houses need to be built per year to meet new demand.

That's a 53 percent increase on what was built in the last year, where only 5986 houses were build.

Westpac's chief economist, Dominick Stephens, says Auckland has been underbuilding since 2008, and the number of people per house has been rising, and is now higher than it was in the late-1990s.

He believes the underbuild is partly due to the global financial crisis and subsequent recession where many property develiopers became insolvent, which has left the some in the sector cautious.

However, Mr Stephens believes there will be a substantial increase in building rates in Auckland.

He says there is a sufficient price signal from the increased profit opportunities for developers for a significant lift in building.

"We are seeing construction activity in Auckland really lift," he says.

Improved certainty was also helping.

Mr Stephens says Wellington and Nelson/Tasman are the other two regions where there is an undersupply of residential building.