How New Zealand built its housing crisis: Te Waihanga releases new research insights

New Zealand Infrastructure Commission, Te Waihanga, chief executive Ross Copland.

Since 1980, cities stopped expanding and infill housing was not encouraged, according to the NZ Infrastructure Commission. Result? House prices have bolted and landed us with the current ‘housing crisis’.

New research from the New Zealand Infrastructure Commission, Te Waihanga shows how Kiwis laid the foundations of today’s housing crisis more than half a century ago.

Over the past 20 years, New Zealand has experienced faster growth in real house prices than any other OECD country.

In the space of a generation, housing has gone from being abundant and reasonably affordable to being scarce and prohibitively expensive.

The new Research Insights report analyses how prices and supply have changed over 90 years from the 1930s to the 2010s, to understand whether more rapid price increases in recent decades are due to faster growth in housing demand, or slow housing supply responses.

The report’s findings also provide further evidence for several recommendations in the New Zealand Infrastructure Strategy.

However, while a difficult situation to change, unaffordable housing is not inevitable or inescapable. This report highlights how it is possible to overcome these challenges, with some significant changes to our approach to planning and infrastructure provision.

Te Waihanga economics director Peter Nunns says house prices have bolted since 1980 because our cities stopped expanding and didn’t develop enough infill housing.

“New Zealand was building at a rapid rate in the 1950s, 60s and 70s, but this has declined continuously since then,” Nunns says.

“Between 2010 and 2018, we built new homes at a slower rate than population growth, and prices accelerated. The research suggests that now, when housing demand increases, we build a quarter to a third less homes than we used to.

“Changes to urban planning and transport that started in the 1970s have raised barriers to housing development.

“Until the 1970s, city councils actively encouraged population growth at the fringe of the cities and in established suburbs. Cars became more affordable and urban roads were paved and improved, allowing people to travel further and faster, and boosting development of new suburbs,” he says.

“Council plans facilitated infill housing prior to the 1970s but started to limit it after that point.

“Planning began to focus less on facilitating growth and planning infrastructure, and more on maintaining the character of existing neighbourhoods by stopping the construction of blocks of flats and apartments.”

Te Waihanga is working on a final New Zealand Infrastructure Strategy that identifies ways that New Zealand’s infrastructure system can support more housing and reverse some of these problems.

Chief executive Ross Copland says a more enabling consenting system will be critical.

“While work is underway to reform our consenting system, it’s critical that it takes on these lessons of the past,” Copland says.

“Te Waihanga research into the last 90 years shows that unless the planning system is very specific about prioritising housing and infrastructure as core objectives, concerns about urban and natural character will continue to prevail over building the homes New Zealanders desperately need.”

The New Zealand Infrastructure Strategy also includes recommendations that would provide for growth by protecting the infrastructure corridors needed to support growing communities, and enable greater urban development that makes better use of transport, water connections and other infrastructure that is already in place.

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