"This urban migration will support significant housing construction and social housing reform will stimulate demand for renovations of shanty houses during the next five years," Luketina said.
About 80 per cent of New Zealand's log exports to China are destined for the construction market.
Domestic production of timber in China cannot keep pace with the growth in demand for wood products, Luketina said, adding that a growing need to set aside forests for ecological reasons, as well as historically poor management of plantations, meant output from China's large forests was well below global averages.
"In the long term, increased domestic production will be realised from China's investment in better management and increased planting of plantations for large trees but slow growth in timber production is expected for at least the next four to five years," he said.
New Zealand was China's largest supplier of imported softwood logs in 2013.
"Radiata pine is very versatile and popular in mills in China," Luketina said. The report said New Zealand is the only major supplier likely to be significantly increasing supply by 2020.
Meanwhile, log prices peaked at US$160 per JAS (Japan Agriculture Standard) cubic metre - at the wharf in China - in March, Luketina said.
The slowdown in residential construction in China, which coincided with a period of high log supply, drove prices down to US$123 per JAS cubic metre.
Inventories rose rapidly from around 2 million tonnes on China's wharves early this year to close to 5 million tonnes but have since fallen back to around an estimated 3.5 million tonnes.
Prices have recovered to US$133 a JAS cubic metre over the last month or so.
"There was a residential construction slowdown and house prices have fallen back below where they were a year ago," Luketina said. "Developers are finding it hard to get access to credit, so they are now selling off inventory."
"It's likely that there will need to be a turnaround in their housing market for demand to pick up again," he said.
