The Economy Hub: Time for Government to build houses?

The Government needs to get more actively involved in the business of building houses, says property developer Helen O'Sullivan, chief executive of Ockham Residential.

"I think you absolutely have to see housing as an infrastructure issue. If you look around the world every city in the world is having a problem with affordable housing," O'Sullivan told The Economy Hub.

"The market is dysfunctional in the sense that we are not providing houses that our key workers can afford to buy.

"If you're an administration worker, a policeman or a nurse and you can't afford to buy a house in Auckland then Auckland has a problem. New Zealand has a problem."

O'Sullivan was discussing issues, including bank funding and construction costs, which have seen a number of new apartment developments called off in the past few months.

Ockham, which has several new builds on the go around the city fringe and West Auckland suburbs has had no issues with funding.

It had a model which focused on medium density projects which could be built in stages so it didn't have the kind of time lags between initial marketing and completion that were seeing some developments hit by rising costs.

But inflation in the sector was an issue and there were serious constraints right now because of the demand.

Part of that was caused by the boom and bust cycles that property development in this country goes through.

That was an area the Government needed to be involved, she said.

"If you look back at the roots of this issue the backlog comes from the 2010 era after the GFC when nothing got built."

"We lost an enormous amount of capacity in the construction sector as all of those experienced construction firms had no work, they laid people off, they moved overseas... We lost three years worth of apprentices, we lost capacity," O'Sullivan said.

"That is totally the place that the state needs to be looking at. It needs to be creative and intelligent and not just chuck money at the problem. I don't think we want to go back to the days of the Ministry of Works.

But I think making it possible for the sector to keep functioning and to maintain capacity, taking the troughs out and stepping back in the peaks."

However yesterday Housing Minister Nick Smith largely rejected the state stepping in to easy boom-bust housing and building cycles:

"I'm sorry, I'm a realist," he said, although he acknowledged there was some influence the Government could have.