New projections show Tauranga's housing challenges are tracking worse than previously expected, resulting in significant adverse effects on future GDP, employment, house prices and rents.

The new information, collated by Tauranga City Council, was presented at its Strategy, Finance and Risk Committee Meeting on Monday.

Council's general manager of strategy, growth and governance general manager Christine Jones says while house prices are easing, new house prices remain high, and development and construction cost pressures constrain the ability for new house prices to fall.

For the first time, the council has received expertise advice on the current estimated housing supply shortage, which is put at around 4300-5300 homes.

This is in addition to forward estimates on housing supply shortages, which show an additional shortage of 3000 homes over the next 10 years.

Previous figures put the housing supply shortage over the next 10 years at only 1500 homes.

Commissioner Stephen Selwood.

Commissioner Stephen Selwood says the dynamic of a national housing shortage is not unexpected and anecdotally, this aligns with experiences in other parts of New Zealand.

'However, this fresh data does reveal the extent of the adverse effects for our city in the future.

'Tauranga City Council continues to do everything in its powers to address these issues and gain the support of government for critical infrastructure investment and policy responses to unlock more housing options, such as the long-term solution to transport challenges in the SH29/Tauriko area.”

If the housing supply shortage is not addressed, it's estimated that within ten years, median house prices will rise from $1M to $1.612M and average weekly rent will increase from $620 to $998.

It's expected that foregone Gross Domestic Product (a measure of the city's economic activity) could rise to $1.609 billion.

While there are limited information sources available for new home prices, the council has surveyed new dwellings listed for sale in June 2022.

This found an average asking price of $1.167M for the 185 dwellings with sales price listed.

'With no new housing being offered at less than $700,000, and very limited stock at less than one million, new housing stock is severely unaffordable compared to incomes in Tauranga,” says Christine.

The new data also shows worsening housing affordability across Western Bay of Plenty, and it's expected that deteriorating housing affordability will encourage more Tauranga residents (and those looking to relocate to Tauranga) to move to smaller, neighbouring towns such as Rotorua, Matamata and Katikati.

Council staff are currently working with several developers, and public and community housing providers, focusing on achieving commitment for more affordable housing outcomes in new greenfield and intensification housing developments.

Council is also progressing, with urgency, a number of residential land and development projects.

They are engaging with government ministers and officials to progress more efficient planning and zoning processes, and funding commitment to necessary infrastructure to unlock new housing.

The full report can be found here.