Westpac Economic Bulletin: New Zealand Residential Construction Update, March 2024

We’re going to need lots of houses

Westpac’s latest Economic Bulletin looks at what the big swings in New Zealand’s population means for housing supply and home building.

The past few years have seen some parts of New Zealand catching up on the underbuilding of homes that we saw in the decade prior to the pandemic. However, with population growth having now picked up to its fastest pace in decades, the pressure on New Zealand’s housing stock is not going away. In fact, some of the progress we’ve made on housing shortages in recent years has been reversed.

On top of existing shortages, New Zealand is going to need around 125,000 additional homes over the next five years to keep up with population growth. And that’s assuming net migration slows from its current record highs. However, despite increases in the population, construction activity is turning down.

The past few years have shown that New Zealand can build houses at a rapid pace if economic conditions are supportive. But until interest rates decline and house price growth picks up again, developers will remain cautious about bringing new projects to market. In addition, with large scale home building needed, adequate infrastructure and a supportive planning environment will be necessary to encourage development activity.

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