The importance of the building and housing sector
The building and housing sector is an important contributor to New Zealand's economic and environmental performance and social wellbeing. It contributes around 5 percent to gross domestic product and impacts on every person in New Zealand in terms of where they live, work and how their communities function.
The sector covers physical building and construction, building professionals and local authorities through to real estate agents, home and building owners, investors, landlords and tenants, and property managers.
The Government influences overall sector performance, the quality of building and housing, and the built environment through:
- regulating building and housing standards and systems
- regulating market transactions
- providing information and services
- providing social housing and other housing programmes
- research and evaluation, and technical advice.
These interventions impact on the quality of life for everyone. They also contribute to the Government's priorities for economic transformation, families - young and old, and national identity.
Economic transformation
A well-performing, vibrant building and housing sector contributes to New Zealand's growth and economic performance, environmental outcomes and social wellbeing. The converse is also true - an underperforming sector can be a significant barrier to growth and have negative impacts on the wellbeing and wealth of individuals, as well as imposing substantial environmental costs.
Housing and building activity levels have significant macroeconomic effects - directly in terms of the consumer price index and interest rates, and indirectly in terms of the 'wealth' effect on spending levels and multiplier effects from employment in the sector. Approximately 90 percent of New Zealand households' net assets are held in housing.1 Almost 25 percent of household expenditure is devoted to direct housing costs. The value of new residential construction in the year to December 2005 amounted to $6,249 million, with a further $1,168 million spent on alterations or additions that required a building permit. Direct government expenditure on housing amounts to more than $1,500 million per annum.
Direct labour market participation in construction amounted to almost 160,000 people or almost 8 percent of the total number of people employed. Employment effects flow into the design, technical advice and services, financial, real estate, legal, maintenance, transportation, materials importation and manufacturing requirements.
A well-performing building and construction sector has the capacity and skills to deliver high-quality buildings to meet demand. Current capacity and capability constraints across the sector are impacting on sector productivity and performance.
Building and housing issues also impact directly on the environment through urban sprawl, in-fill effects, infrastructure requirements (transport, energy, sewerage systems and water supply), and people's sense of the amenity value of their neighbourhoods. Growing urbanisation and demands on energy make enhancing energy efficiency and reducing waste and pollution important goals - yet these can also have significant flow-through effects on building materials, housing, and building design and construction (or repair and retrofitting) costs. Getting the balance right between costs and benefits, both short term and long term, is critically important.
Strong, vibrant communities and cities attract and retain people because they are great places to live and work. For New Zealand to be an attractive destination for people and skills in a highly competitive international market, how well our cities and towns work and the quality of our built environment matter. Sustainable development and building sustainable cities are an important part of this.
The need for reform to lift building quality and performance and improve the skills and professionalism of the sector is recognised at both government and sector level. Reforms are under way to deliver improved performance. These reforms will take time to implement and have an impact.
Well-designed and built commercial buildings provide the basis for innovative and productive workplaces. They contribute directly to developing a safe and healthy workplace, which in turn underpins workplace productivity and innovation.
Families young and old
Good-quality housing contributes positively to the development of strong families, their wellbeing, and the health, educational and social development of children.
Housing and the surrounding built environment provides the base for our families to engage with the community of which they are a part, allowing the development of community links and networks. The built environment provides for both the commercial and social needs of the community. Well-designed built environments provide spaces for recreation, which in turn can help foster healthy and confident kids, and better health for all. Good planning and design is also central to providing a built environment that enhances community safety.
Trends and developments
The Department monitors and evaluates trends and developments in the building and housing sector and our wider business environment. An analysis of these trends and developments is included in Part C.
National identity
Our houses, buildings and built environment play an important part in defining our national identity. While these are places where we live and work, they also reflect our history and who we are as a people. Our architecture draws upon the heritage of the people who have settled in New Zealand, and has evolved in a manner that takes account of our unique geography and climate, our needs and how we live our lives. The design, functionality and materials we use in our homes, buildings and built environment make a statement about who we are. They contribute to how we are seen by the world.