House building at a 10-year high but challenges could derail progress

Dennis Saywell from Dawson Building laying foundations for a new house at the new Oakview Subdivision on the Back Ormond Road. One new house has been completed and 10 more are under way. Picture by Paul Rickard

The number of houses being built here is at a 10-year high but the region’s population is growing faster than government predictions, a new report shows.

The region’s fourth housing stocktake report, compiled by Sense Partners for Manaaki Tairāwhiti, reveals an improvement in housing provision but also warns of challenges that could derail progress.

The report said 186 residential dwellings were consented in Gisborne in the year to June 2023 – the highest in over a decade and up 5 percent on a year earlier.

However, housing continues to drive deprivation across Gisborne with the number of whānau on the housing register at 603, up a little under 5 percent from the previous year.

The report pointed out that Gisborne is an expensive location to build — labour costs are high, and companies struggle to find the scale that would reduce costs.

“Up to 2021, the market price of housing was outstripping construction costs,”  the report said.

“Today, that ratio is falling materially. House prices have reduced, and the cost of construction has increased, reducing the wedge between the cost of constructing a house and the market price.

“The most recent data suggests the pace of construction cost inflation is easing.”

The report said increases in demand for housing were underpinned by a growing population.

“Gisborne’s population grew at 1.15 percent in the year to 2023 —  close to the historical average over the past century, adding about 600 people to the region.”

That figure is at odds with what the report said were “conservative” population estimates from Statistics New Zealand.

“Statistics New Zealand’s net migration forecasts for Gisborne suggests very low growth. The high forecasts suggest growth of 1000 people every five years and the medium suggests no population growth every five years while the low scenario has 1000 people leaving every five years.”

If Gisborne continues to hit this year’s number of 600, every year, it would see an influx of 3000 people every five years, 2000 more than Stats NZ’s high estimate.

“Since population growth is a key driver of demand for housing, the local community needs to be careful to gauge what needs to be done on the supply side against sensible forecasts of demand. Otherwise, this risks future housing shortages.”

Manaaki Tairāwhiti is the governance group made up of iwi, government agencies and support organisations involved in housing set up to address the region’s housing crisis.