Strategic environment in which the Department operates

Demographic changes

The country's population is projected to reach 5 million in the late 2020s.
Net migration has influenced housing trends, in particular by increasing the demand for housing in Auckland.
Significant trends within the overall population include:
- changes in the age structure of the population over the next 40-50 years, with more older people
- changing family structures and increased ethnic diversity
- continued urbanisation, especially with the population of Auckland growing faster than the rest of New Zealand.

The rate of homeownership has been declining since 1991.
Growth in house prices has been consistently strong, with the median house price doubling over the past 10 years.
Affordability has reduced, as median house prices have increased much faster than the increase in median incomes.
The upward movement of house prices is slowing and a downwards adjustment is likely.

The percentage of households in rental housing increased from 32.2 percent in the 2001 census to 33.1 percent in the 2006 census.
Rental household numbers are expected to increase due to the cost of homeownership. The number of households renting long term is expected to increase.
Circumstances of those renting are diverse and have been changing in terms of age, household structure and ethnicity.

There has been a steady increase in New Zealand's gross domestic product (GDP) in recent years, and economic growth was 3.1 percent in the year to December 2007 compared with 1.5 percent a year ago.
The construction sector makes a significant contribution to the New Zealand economy, about 5% of GDP. The size of the sector increased - the sector in the year to December 2007 was 39.7 percent larger (after adjusting for inflation) than what it was in the year to December 2000.
Residential building activity increased, with $7.8 billion of residential consents issued in 2007, $503 million more than 2006. However, the trend for the value of residential consents has shown a decline from July 2007 onwards and an ongoing decline in residential construction is expected.
The total value of non-residential building activity in 2007 was $4.2 billion and this is an increase of $247 million from 2006.

A strong domestic economy has placed greater demand on the labour market with the unemployment rate being at a record low.
Annual wage and salary increases in the construction industry are consistent with increases in the wider workforce.
Demand for trade skills remains strong with supply constrained.
A record 191,700 people were employed in the construction sector during the December 2006 quarter, but employment has eased back to 181,700 in the December 2007 quarter.
Construction sector employment rates have declined in recent quarters. However, the employment market is likely to remain relatively tight because of a high and stable trend in the value of non-residential building consents, and the demand for skilled tradespeople and building professionals.