Wellington is building too few new houses, with a regional shortage of more than 1200 homes built up over the past few years, according to a report by Westpac Bank.
The report shows Auckland is the standout for the undersupply of homes, with an estimated shortage of more than 13,000 homes.
Westpac's report shows almost 1370 new homes were built in Wellington last year, but that needed to jump by 27 per cent a year to meet new demand.
However, that was nowhere near the 53 per cent lift in house building required in Auckland to meet pent-up demand.
While Wellington is not building enough homes, according to Westpac, real estate agents say there is no sign of urgency among buyers at present.
And an apartment developer said there was "solid demand", though it was not a bottomless pit of confidence.
The central city population has boomed in the past decade or so, with thousands more people living in new apartments or revamped former office buildings.
In the downtown area, the population has almost doubled from about 6700 in 2000, to almost 13,000 last year, according to Wellington City Council figures.
"If you didn't have that, you'd have a real problem (with housing)" Wellington City councillor Andy Foster said yesterday. About 40 per cent of new homes in the city were apartments, which was more than earlier expected.
"That's good - it is adding to the vitality of the central city and putting less pressure on transport and resources. And we welcome that," Foster said. Part of that growth was because the council did not require car parking for apartments.
But greenfields development on bare land was slower, though Foster argued that was a good thing because it was also the most expensive to service.
Foster questioned Westpac's assessment of a big shortage of homes because the city had more middle-aged and younger people, rather than older people who tended to have fewer people per household and so needed more homes.
But he admits that Wellington was "getting a little bit behind" with building consents compared with the growing population.
Harcourts Wellington managing director Marty Scott said there was not a lot of room for new homes in central Wellington, aside from apartment buildings in the central city.
"There is not the land for it," Scott said.
There was space available further out, but developers only opened it up to cater for clear demand, rather than building on "spec". The general feeling in the lower North Island was "a bit of energy has left the (property) market".
The Reserve Bank's speed limits on low deposit loans had reduced buyer interest, as had the threat of rising interest rates.
"If there is a shortage of 1200 homes in the wider Wellington, I don't think we are seeing the urgency from buyers to indicate that to be the case," Scott said. The market appeared fairly well balanced between supply and demand.
- The Dominion Post
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