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Statement of Intent 07/10

Contents

Part A: An overview of our strategy

Part B: Current year forecasts

Part C: Additional information

Context

The strategic direction outlined in this Statement of Intent needs to take account of changes in the social, economic and environmental context within which the Department operates. Set out below are some of the key features and trends of this context. A fuller description of issues and trends is set out in Part C.

Demographic changes

  • The country's population is projected to grow to 5.05 million by 2051.
  • 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.

Homeownership and affordability

  • 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.

Trends in rental housing

  • 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 as homeownership becomes less affordable.
  • Circumstances of those renting are diverse and have been changing in terms of age, household structure and ethnicity.

Economic factors

  • There has been a steady increase in New Zealand's gross domestic product in recent years, although economic growth slowed to 1.5 percent in the year to December 2006, compared to 2.2 percent a year ago.
  • The construction sector makes a significant contribution of about 5 percent to the New Zealand economy. The size of the sector has been increasing since the March 2001 year - the sector expanded by 41 percent in the March 2006 year when compared to the March 2001 year.
  • Residential building activity increased, with $417 million worth of additional residential consents issued in 2006 compared to 2005. However, the trend for the value of residential consents has shown a decline since August 2006.
  • Non-residential building activity decreased by $216 million in 2006 compared to 2005.

Labour market

  • 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 higher than 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.
  • There is likely to be continued growth in construction sector employment, with an increase in the number of building-related job vacancies advertised in February 2007 when compared to February 2006.