The New Zealand Herald states “the collapse in home building caused not so much by softening demand, but by the property financing sector implosion” as one reason for the shortage. However, Infometrics NZ maintains the cause is construction rates not keeping pace with population growth.

“The persistently low level of residential construction activity in Auckland over the past few years has led to a shortage of property in the region. These under-supply issues are set to provide good support for property prices over the next 12 months.”

Bank of New Zealand Chief Economist, Tony Alexander, agrees.

“Unlike other countries, New Zealand did not enter the recession with an oversupply of homes… Even if home building picked up by the end of the year, it would not be back to sufficient levels until 2011, or the end of 2010 at a pinch.”

Other factors that have contributed to the sector’s lack of supply are fewer people leaving the country and more returning from overseas due to the recession.  The qualified purchaser pool also contracted, due in part to banks wanting as much as 50 percent equity from borrowers during the height of the global recession.

There have been positive repercussions for the property sector. According to Alexander, house prices have stabilised and will continue to rise gradually.

“Now we are simply looking at an environment over the next few years where prices rise relatively gradually under pressure from above-average population growth, below average interest rates for the next 12 to 18 months, and a shortage of dwellings.”

The future is looking positive as the property sector gains momentum. As the credit rationing of the previous 18 months begins to ease and the relatively scarce new housing stock is taken up, developers will be well-placed to capitalize on the upward surge in demand and price.

The development was designed to meet the needs of two different types of buyers – those who prefer standard sized sections, in a rural residential setting, as well those to whom larger sections are a requirement.  The size of the larger sections allows generous site coverage, whilst still preserving sought after rural elements, such as large greenspaces, native flora and fauna and privacy.

The developer opted for the creation of a 4 hectare recreation reserve, an area in excess of what was required under the Waitakere City Council operative plan.  It was considered in keeping with the nature of the site and the surrounding area to preserve native bush and maximize the reserve area - not compromise the development by overcrowding with sections. 

The additional reserve land will be used to assist in the development of Waitakere City Council’s Twinstreams Project – an urban sustainability initiative designed to increase native bush, household efficiency and community engagement.  This will include development of a mountain biking facility in the adjacent Te Rangi Hiroa Reserve.

Birdwood Estate’s lead agent, Russell Benshaw from KEY2 comments:  

“The news is all positive for residential property at present. With a shortage of houses for sale people are looking at the building option hence the increased enquiry for land. Birdwood Estate is now starting to come into its own as the only other land subdivisions in Massey are sold out. With a range of sites from 450sm to 4000sm Birdwood is a unique offering in today’s improving market. Four large brand building companies have been engaged along with specialist new property real estate company KEY2 to put together full turn key house and land packages for purchasers.”

With the Reserve Bank clearly indicating the cash rate will remain at or below its current basement level for the next 18 months, the market of potential borrowers is expanding, and their borrowing power is increasing.

From the supply side, an 18 month period of crippled debt markets and largely paralyzed domestic lenders has meant many developers have been unable to commence or complete projects.  Statistics NZ estimates that Auckland needs 12,000 houses per year.  In the year to February, only 3722 new dwelling consents were issued.   By next year, the city’s housing stock shortage will pass 9000, exceeding 15,000 by 2012.