What's happening in the crazy world of New Zealand's fluctuating house prices?

Statistics NZ came out with that rarest of things this week: Good news about the housing market.

Residential building consents had hit a 45-year high in the year to November, with over 37,000 dwellings consented. New Zealand finally appear to be building about what we managed in the 1970s, when our country had about 2 million less people in it yet still managed to crank out a similar number of homes as we do now.

But economists say that kind of build-rate will need to be maintained and built-upon for years to make up for the shortfall of houses across New Zealand. And progress is patchy: Auckland is streaming ahead while Wellington remains well behind.

NOT MUCH HOPE FOR HOUSE PRICES DROPPING

New Zealand's sky-high house prices in places like Auckland and Wellington are typically blamed on a lack of supply.

So surely record numbers of consents might help bring prices down?

Economist Shamubeel Eaqub said one good year of good consents was nowhere near enough to make up for a massive shortfall that's arisen over many years of anemic house-building.

"You've got to fill the deficit and then keep up with population growth," Eaqub said.

"We simply don't build enough houses when population growth is high or low - we persistently underbuild.

"Because there is still a lot of pent-up demand from that pent-up shortage people are still willing to pay a lot of money to find that place to call a home."

ANZ economist Liz Kendall said something would need to be done about the high price of land - which made up a huge part of the overall cost of most homes - before prices actually dropped.

"[High building] will keep house prices in check relevant to the counterfactual where they are not being built. But when you see more land being released and the price of land coming down, that's when the market will fundamentally change," Kendall said.

CHRIS MCKEEN Elaine Dyett has just moved into her new Papatoetoe build, which she spent years designing and building - including a tedious consenting process.

Fundamental changes to the Resource Management Act (RMA) would be needed for this to really happen, Kendall said.

Both Labour and National have big plans to reform the hydra of the RMA, one of New Zealand's most hated laws. But parties have talked up reforming the RMA for over a decade, and little serious change has happened.

Kendall doubted New Zealand had much of appetite for changes that would lower the cost of houses.

Veteran Wellington property developer Ian Cassels agreed.

"I think the electorate isn't demanding enough of its politicians. Somehow or another they are just getting let off one decade to the next," Cassels said.

LAWRENCE SMITH/STUFF Economist Shamubeel Eaqub said this build rate would need to be maintained for years to make up for the shortfall.

AUCKLAND LEADING THE WAY

Elaine Dyett spent four years getting the design and consenting process finished for her dream Auckland home. But it was worth it.

The four-bedroom Papatoetoe home is well over minimum standards for insulation, leading to a quiet and warm home she can retire in.

"I'm a greenie, and I hate waste. To me, a home that is built this way is healthier and far more economical to run long term," she said.

"When I retire I don't want the prospect of costs going up while I'm on a fixed income...I didn't want to be an old lady sitting under the heat pump."

The consenting process took months and was tedious, with rounds of questions from the council that put the freeze on the statutory time-frame for consents.

Yet Dyett probably would have had a much harder time if she lived anywhere else in the country.

The 2016 Auckland Unitary Plan, which rezoned many areas for higher-density housing and set brought together a standard rulebook across the city, is seen by many as key to the sky-high number of consents.

"Because of the Unitary Plan Auckland is building like gangbusters," Eaqub said.

"The Unitary Plan was a real bright spot. People rail against the RMA and things like that, but for whatever regulatory framework there is, there will always be issues. The Unitary Plan is a good example of what can be done."

ROSS GIBLIN/STUFF Ian Cassels, director of The Wellington Company, said Auckland had got its act together.

Cassels, who heads up The Wellington Company, said Auckland was dealing with the problem while Wellington was not.

"They've made some breakthroughs. They've got some consenting wins. The city is more able to act in its own best interest," Cassels said.

"[Wellington] don't seem to be able to act in our own best interest. We have a housing crisis and we do nothing about it."

Cassels said he still saw "intense delays" getting projects consented.

"They can extend it virtually forever. The string doesn't get any tighter. There is no 'this must get done' control over things."

The numbers certainly suggest Wellington is lagging. Consents grew from 1314 a decade ago to just 3036 in 2019 in Wellington. Over the same period in Auckland they grew from 3487 a year in 2009 to 14,866 in 2019. House prices in Wellington have surged in recent years, while the growth has slowed in Auckland.

Ockham Residential lead architect Tania Wong said her company's relationship with Auckland Council had improved markedly over the last decade.

"You build up a level of trust....The unitary plan has certainly given us more opportunities."

Her company is focused on higher-density living - which is what is driving the growth.

HIGH-DENSITY LIVING DRIVING GROWTH

New Zealanders still overwhelmingly prefer stand-alone homes to any other way of living.

Of the 37,000 dwellings consented in the year to last November, 22,000 were stand-alone homes.

But while this number is growing, higher density units like apartments and townhouses are really pushing the growth.

Back in 2014, when the sector was still consenting over 18,000 new standalone homes, there were only 6258 consents for other types of units. There were close to 15,000 in the last year.

Standalone homes still make up the majority of homes intended to be built, but the growth there is mostly plateauing, Statistics NZ construction statistics manager Melissa McKenzie said.

Unsurprisingly, that higher density living is mostly concentrated in the main urban centres, particularly Auckland and Wellington.

But getting higher density units consented can be a lot trickier than getting homes consented - and getting them built can be even harder.

"You need a crane for every apartment block. You don't need one for a standalone home," McKenzie said.

"You're competing for resources with non-residential construction."

Kendall said it was encouraging to see higher-density building but the market was more vulnerable to other economic forces than traditional building.

"There are additional hoops that people need to go through - developer finance, getting people to pre-commit to sales...It's a more volatile part of the industry."

Apartment building last peaked in the mid-2000s, before crashing down to as low as 399 consents in the year to November 2011.

Kendall said there was a risk, even with the strong demand, that developers would plow too much money into the industry and face serious issues when the economy hit a snag.

"With the 2000s there was a really strong boom in the existing housing market, with lots of house price inflation over that period of time - but it overshot. That's always a risk that you see - there are indications of strong demand. More gets invested in the industry than is sustainable."

Opinions differ on whether more growth is on the way, or if we won't see houses built this much for another half-century.

Back in the 1970s there was a cornucopia of government policies to encourage house-building. Nowadays there is some Government help, but real subsidies are rare, and planning laws remain restrictive in much of the country. Cheap money and population growth have kept the consents running hot for the last few years, but neither of those things are guaranteed long term.

"I think there's going to be a recession coming," Wong said, noting some slowdown in recent months.

A recession may not send house prices down in a way affordability advocates would like. But it will lead to a whole lot less houses being built - which itself will lead to prices spiking again eventually. Some cycles never end.

Additional reporting by Kelly Dennett.