Weak economy wipes out Blenheim's housing shortfall

Blenheim could be facing a housing surplus in the next 30 years, instead of the 900-home shortfall predicted in 2022, due to a weak economy and lower projected population growth.

The town was now projected to have 1350 more homes than it would need by 2055, a housing capacity assessment by the Marlborough District Council has found.

Strategic planner Clementine Rankin told councillors on 9 July that this massive swing was mainly because of economic headwinds dampening demand and population growth challenges, rather than an increase in housing supply.

Rankin said that in 2022, the post-Covid housing market was "very different" than 2025.

Interest rates were very low and there was "a real impetus for growth" in housing value to keep the economy going.

At a local level, at that time, the viticulture industry was performing well and there was higher demand for housing due to the need for viticulture workers, Rankin said.

The 2025 market was buyer-controlled, with median prices plateaued around $634,000, down 5 percent from 2022.

Sales took 40 to 45 days to complete, up 10 days on a year earlier, while building consents had hit a "historic low", the report said.

In 2022, Marlborough's population was projected to increase by 9490 people to 61,000 by 2048. Three years later, the region was looking at a more moderate growth of 5000 people, reaching a Marlborough population of 55,800 by 2055.

Housing sociologist Kay Saville-Smith told Local Democracy Reporting on Tuesday there were inherent challenges in making 30-year projections based on data from short-term cycles.

But she considered a short-term surplus of 85 dwellings within one to three years "quite probable".

While total housing stock was in surplus, there was still a shortage of affordable housing for moderate and low-income households, both to rent or to buy, she said.

The report said that despite softening conditions, house prices remained 4.9 times the average household income, down from 6.1 in 2022, but still "strongly on the unaffordable side", the report said.

Saville-Smith said she did not see that problem being resolved, "and that that will impact on our employment, [and] our ability to attract people to Marlborough".

Marlborough's population was also ageing. Research by the Helen Clark Foundation found more than 30 percent of Marlborough residents would be over 65 by 2048.

Older households tended to be smaller, and demand for one or two-bedroom homes had increased, "significantly outstripping" the region's supply, the report said.

Saville-Smith said the idea that older people should be housed in one-bedroom "pods" was "highly problematic".

"It means that they can't get support in their homes, they can't have people staying with them, they can't entertain families."

While townhouse and retirement unit construction had risen since 2022, only 16 percent of building consents in the past three years were for one and two-bedroom homes, the report said.

Saville-Smith said she was not seeing any indication that commercial developers would begin building smaller homes, because family-sized homes were "a safe place for the building industry to build".

"And they will continue to do that, unless there is something that gives them an incentive not to."

Seniors used to be the favoured tenants for private landlords, but that had changed, Saville-Smith said.

"There's not enough income to accommodate your desire to be able to increase rents."

The council's head of environmental policy Pere Hawes told Local Democracy Reporting this week that the housing capacity assessment had been informed by updated population projections by Stats NZ, and new information about market conditions and housing supply.

The council was now confident there was enough land available in the Blenheim Urban Area to meet demand for development in the long-term, Hawes said.

"Our assessment also confirmed that there is sufficient business and industrial capacity in most zones, although there may be a long-term shortfall in the Industrial 1-zoned land.

The council will continue to work with landowners seeking to rezone rural land on the periphery of Blenheim, in the event of slow release of residentially zoned greenfields land, Hawes said.

"It is up to landowners to choose to develop their land for housing. This will also act as contingency for any future change in the rate of population growth. Our work is also exploring opportunities for intensification within Blenheim's existing zoned and developed (brownfields) land."

All councils used Stats NZ projections for planning, but it was a "snapshot in time" and regular reviews were important, "as growth projections and economic conditions change and evolve".

LDR is local body journalism co-funded by RNZ and NZ On Air.