The lack of new houses being built and construction industry capacity issues as the Christchurch rebuild begins will lead to an inevitable rise in house prices, according to BNZ economist Tony Alexander.
In his latest BNZ Weekly Overview, Alexander said nationwide housing consent figures revealed consents for the March quarter were 25.3% lower than a year ago and 8.4% down on the December quarter.
"The simple truth going forward remains the same as it has been since we started highlighting the issue in the second half of 2004. We are not building enough houses in New Zealand. We won't be able to. Prices will rise. It's fairly simple really."
While consents were lower across the country, Alexander said signs of a pick-up had been seen in Auckland.
Auckland city (old classification) saw consents up 35.3% on the year, while Manukau was 29.8% higher.
While some areas showed falls, Alexander believes the general Auckland pick-up, "butting up against Christchurch rebuilding", will push up construction costs, leading to price rises.
Alexander also said the recent Barfoot & Thompson real estate data has shown a recovery in the Auckland market, with 723 dwellings sold in April, a rise of 7.7% on April 2010.
The ratio of sales to listings is also trending upward, and Alexander said more investors were becoming active in the Auckland market.
"The implication of improving sales in the absence of a listings flood is fairly obvious and probably helps explain why more investors are in the market," he said.
"In fact our BNZ-REINZ Market Survey last month showed a net 41% of agents responding in the Auckland market noting that there are more investors in the market. The New Zealand-wide net was 32%."