Southland Housing Situation Report
Great South has continued to measure and report on the changing housing needs in Southland. The Southland Housing Situation Analysis Report builds on earlier work also undertaken by Great South in 2018 and has utilised inputs from recent Infometrics economic and population modelling and other external data as listed in the report.
Southland is currently building more houses per annum that the previous high which was recorded in 2005. The average number new houses being built, net of demolitions is 237 houses per annum. Despite this fact our housing stock is not meeting the growing demand for houses, across all categories from social and emergency housing, first homes, elderly housing through to executive housing. The total Housing Stock hasn’t matched our population since 2013. Consented residential land available for building new homes is also well a truly lagging the demand for housing. The lack of builders, subtrades and building material supply constraints are further exacerbating the situation throughout the region.
Considerable work needs to be undertaken to work with the local industry and stakeholders to attract developers and investors into the Southland market in order to accelerate subdivision development and house building. To date Great South has introduced several investors and developers and has worked with the Southland Housing Action Forum (SHAF) to stimulate a range of new opportunities. Annual House construction needs to quadruple to address housing needs over the next four years.
The findings from this report will hopefully assist SHAF, support agencies and Councils to undertake the planning necessary drive new housing development.
The lack of housing is seriously impacting on the attraction and retention of skills for all sectors and is a significant roadblock for growing the regional population.
- A key driver for Southland’s housing market is the growth in population. Our estimate is there is an existing housing shortage of around 1,659 houses.
- This has put pressure on the existing undersupply of property in Southland and subsequently has driven significant increases in both property prices and rent. This increase is around 18% for the region in property value compared to the same time last year, while rents have on average increased 50% since 2018.
- Even if all residential properties consented for construction are constructed, this will not address the current demand for property.
- The downturn in tourism in some areas (such as Fiordland) has provided some relief from the rental property market perspective by freeing up Airbnb properties for longer term rental. However, this is not consistent across Southland.
- Access to residential property to buy and rent will be a key factor restricting future industry development in the region.
- We have seen a significant increase of 254% in the need for social emergency housing in Southland since the previous report. This has not been matched by supply, which has remained flat since then. In addition, Salvation Army previously estimates that up to 500 people are currently living rough within the region.
- The Social Housing waiting list3 has grown from just over 50 applicants in 2018 to over 200 applicants in June 2021 (applicants do not include family members and dependant others)
- A significant shortfall in housing is forecast assuming continued population growth based on the Infometrics modelling and current rates of construction. Without action, this shortage could increase to 3,415 houses and possibly more by the year 2025.
- This will significantly hamper the ability to achieve population growth, meet recruitment and skills attraction, and effectively service existing and new industry in the region.
- This report has shown that an increased shortage of housing is likely to become a driver of increased property and rental prices. This disproportionally affects the lower socioeconomic groups and will likely further increase demand for social housing.
- Even though Southland Warm Homes Trust has insulated more than 8,000 homes in the last 15 years, newcomers to the region are constantly concerned about inadequacy of Southland’s home insulation and heating. Accordingly, there is a need to ensure that new homes are well insulated and that other factors such orientation to the sun is factored into subdivision and house planning.
The report highlights many of the challenges associated with the supply of housing within the region however there are also some significant opportunities to drive change by taking a new and innovative approach to house building. Lesson can be learnt from a typical Scandinavian model by utilising highly efficient factory-based prefabrication. The emergence of tiny homes as a viable method of placing ancillary dwellings on larger sections as well as multiple units on single parcels of land, presents other practical options. The introduction of supervised trade assistants into all aspects of the construction supply chain may assist in overcoming labour constraints.
Active attraction of capital into local building and property development sector would be greatly enhanced if a reliable source of the development capital were available for the development ‘brown fields’ sites. There is a particular need for short term capital to service residential properties and subdivisions where the cost of connections to contiguous services is incurred well in advance of the property title being issued and income being received from subsequent sale. This is very important to assist in the development of development of social housing, where affordability is essential, and margins are thin.
The creation of replenishable ‘revolving credit’ pool may be the answer these challenges. Such a mechanism could have a government underwrite and could be established, in the first instance by government grant, matched by local funding; philanthropic and other public good funding. The pool could be drawn down to stimulate viable social and affordable housing projects (possibly under a general security agreement) and a proportion of rental and or sales income would then repay the pool. Such a fund could also be topped up on an annual basis by say the Ministry of Housing and Urban Development (HUD) or others, based on ‘success payment’ for houses delivered. 3 New Zealand Housing Register – Southland – Ministry of Social Development.
Published by Great South – October 2021