The latest census data show housing pressures are not confined to major centres like Auckland and Wellington

The latest census data show housing pressures are not confined to major centres like Auckland and Wellington

The undersupply of housing may be far worse in many provincial centres than it is in Auckland, according to the latest census figures released by Statistics NZ.

The figures show that between the 2013 and 2018 censuses this country's usually resident population increased by 10.8%, while the total number of dwellings (occupied and unoccupied) increased by just 6.2%.

Population growth outstripped dwelling growth by a considerable margin in all regions of the country except the West Coast, which had a decline in population (see table below for the full regional breakdown).

In percentage terms the regions the regions with the greatest population growth were Northland +18.1%, Bay of Plenty +15.2% and Waikato +13.5%, while those regions recorded dwelling growth of just 8.1%, 8.1% and 7.9% respectively.

In terms of the numbers of people in each region, Auckland had the greatest increase with its normally resident population growing by 156,168 (+11.0%) between the two censuses, while the total number of dwellings in the region increased by just 6.5% over the same period.

In the Wellington Region the population increased by 7.5% while the number of dwellings increased by just 4.5% and in Canterbury the population was up 11.2% while dwellings were up 6.9%.

However, the disparity between population and dwelling growth was greatest in many provincial regions such as Marlborough, where the population grew by 9.0% but the dwelling count was up by just 1.1% and Gisborne where the population grew by 8.9% but dwellings were up by just 2.8%.

The figures suggest that while the shortage of housing may be greatest in Auckland in terms of absolute numbers, regional centres may be facing even greater pressure in terms of the changing balance between supply and demand.

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Regional Population* and Dwelling* Counts - Change from 2013 Census to 2018 Census
Region 2018 Population Count % Change from 2013 2018 Dwelling Count % Change from 20132
Northland 179,076 18.1 79,392 8.1
Auckland 1,571,718 11.0 538,182 6.5
Waikato 458,202 13.5 195,468 7.9
Bay of Plenty 308,499 15.2 125,880 8.1
Gisborne 47,517 8.9 18,435 2.8
Hawkes Bay 166,368 10.0 66,120 3.4
Taranaki 117,561 7.3 49,503 5.2
Manawatu-Whanganui 238,797 7.2 102,000 3.1
Wellington Region 506,814 7.5 200,979 4.5
Tasman 52,389 11.1 23,001 8.0
Nelson 50,880 9.6 21,213 6.0
Marlborough 47,340 9.0 22,149 1.1
West Coast 31,575 -1.8 16,842 3.2
Canterbury 599,694 11.2 251,532 6.9
Otago 225,186 11.2 101,091 8.4
Southland 97,467 4.4 43,836 3.3
Total NZ 4,699,089 10.8 1,885,626 6.2
*Usually resident population      
*Occupied & unoccupied dwellings      

 

 

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76 Comments

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29
up

Stop importing migrants for low skilled jobs.

These migrants are taking jobs away from students, which like me needed to start somewhere, rather than now parking themselves on the phones or laptops at home. Social media is turning them into zombies.

Actually, I don't know how serious your post is, but you are correct to some extent. The problem of few career opportunitirs for graduates in Japan was mitigated to some extent by the large number of low-paid, service sector jobs. I'm not saying that's an ideal situation, but the reality is that Japanese graduates could still work, despite the job being relatively low in prestige and income. The situation is quite dire though and Japan is importing Chinese and Vietnamese for these low-paid jobs.

11
up

I look forward to what is sure to be an excellent display of mental gymnastics in today's comments. Thinking caps on - how can this data be spun to point to an imminent collapse in house prices?

See DGM's comment below. Given number of people in dwellings averages around 2.7, and with migrants anecdotally being at least 10 in one dwelling, there is a massive oversupply of dwellings and therefore prices must fall (economics 101).

I was going to make that very point.

Thinking caps on - how can this data be spun to point to an imminent collapse in house prices?

The data doesn't show the relationship between population growth as a driver of house prices. Regardless, if a simple regression coefficient was generated between popn growth and house price growth, that doesn't necessarily lead to the hypothesis that "house prices in NZ can't fall because population growth is high."

You wouldn't regress house price growth on population growth - the two are endogenous.

You wouldn't regress house price growth on population growth - the two are endogenous.

What a load of rot. If I wanted to do linear regression of popn growth on house price growth, the former can be included as an independent variable. No different to credit growth or cost of credit.

Yes. You could include it, but your results wouldn't be worth much.
One of the key tenets of (linear) regression (you should know this being a data analysis professional) is that anything on the right hand side is exogenous to the left hand side of the equation. Otherwise, you get biased results.
Prices and population are endogenous.
Credit growth and cost of credit are endogenous.
Thus, you get simultaneity bias in your coefficients. i.e your coefficients are not asymptotically optimal. i.e. you cannot test your hypothesis. i.e. your regression is pointless.

There are ways around this, of course. But what you are proposing is categorically poor analysis.

Thus, you get simultaneity bias in your coefficients. i.e your coefficients are not asymptotically optimal. i.e. you cannot test your hypothesis. i.e. your regression is pointless.

Well read my comment that suggests "population growth isn't necessarily a driver of house prices." It can't be interpreted any other way. For that reason, house prices may collapse even with high population growth.

As for using regression analysis to understand house price growth, it is a useful tool for directional understanding of relationships.

population growth isn't necessarily a driver of house prices
But it is. All research points to house price growth being a function of exogenous demand when it is properly instrumented. There is contention as to what aspects of population growth drive demand. But the consensus is definitely not that prices and population are not positively correlated / endogenously determined.

As for using regression analysis to understand house price growth, it is a useful tool for directional understanding of relationships.
Again, no it is not. A regression alone does not show a directional understanding between two variables - hence the exogeneity assumption you keep ignoring. It does not imply causality on it's own; just correlation. Establishing causality requires structural assumptions and quite a few more time series tests. Without those, a linear regression is, and always be, simple (and often spurious, in a time series context) correlation - variance / covariance

A regression alone does not show a directional understanding between two variables. It does not imply causality on it's own; just correlation.

It shows a "directional relationship". If the coefficient is +0.7, I understand there is a reasonably strong statistical relationship between the variables. That's not claiming to prove causation at all. It also doesn't mean strong population growth cannot prevent house prices to fall.

Furthermore, time-series data is almost always used in regression analysis of house price drivers. Doesn't make sense any other way.

It shows a "directional relationship". If the coefficient is +0.7
No it doesn't - that is correlation. That has nothing to do with direction because the two can be simultaneously determined.
And the coefficient can only maintain a strong statistical relationship if you can assume some sort of asymptotic convergence between that coefficient and the true coefficient - which you can not in the case that the variables are co-determined / endogenous.

Furthermore, time-series data is almost always used in regression analysis of house price drivers.
Again. Nope. The majority of hedonics work is done in a repeated cross sectional framework.

Rubbish

Rubbish?
You know you could always read up on the fundamentals of linear regression. It won't sound like rubbish, then.

What's the borrowing capacity of these new residents? 1000 potential buyers each with $500k - $600k to spend is no good if you want $700k for your house.

I'm guessing you plucked $500k - $600k out of thin air? I can do that too - $1.2M is plenty if you want a $1M house.

You need to make about $180k a year to borrow $1.2M. How many of these immigrants do you reckon make that much?

I visited one of these troublesome immigrants this weekend. Recently purchased a $1.2m house in millwater. Not all immigrants are Uber drivers and kiwifruit pickers.

Obviously some of them can afford it. Doubt it's anything close to a majority, though. I'm going to go ahead and guess nzdan's randomly picked numbers are closer.

He asked how many, not for one stand alone example that obviously doesn't represent the majority

I did pluck $500k - $600k out of thin air, it was a theoretical example. I didn't think it was rocket science to pick that up, particularly with my exaggerated "1000 potential buyers" bit.

Significantly increasing house prices can't be ruled out in the not-too-distant future........

In fact, based on reports here, it may have started already.

TTP

You have gone one better than not ruling them out. You gave a firm prediction a couple of weeks back that they will rise significantly next year

Sorry Fritz. My position has been that price rises can't be ruled out.

Haven't made a "firm prediction".

TTP

Ah, typical property guy, shifty with the facts. I recorded the day you made your firm prediction, because we know that you shift like the wind to fit the facts.
Date of prediction 30 August

Sorry Fritz, my predictions are both consistent - and consistently correct.

As you well know, when I change a prediction, I make it very clear to the readership.

Please note, therefore, that my position is that, "significant property price increases can't be ruled out in the not-too-distant future".

Fritz - you'd be much better off putting your time into buying a property than arguing with me.

TTP

You are a BS artist.
On 30 August you said there is a 'very high likelihood of significant house price increases in the next 12 months.' That's very firm, like a 80-90% chance.
Now you are saying significant increases in house prices 'can't be ruled out'. That's like a 50/50 call so massive inconsistency.
It's hard to take you seriously.

Here is the article if anyone else is wondering: https://www.interest.co.nz/property/101451/number-new-dwellings-being-co...

Scroll down a bit to see TTP's comment:

"There's a huge pent-up demand for residential housing across Auckland.

Notably, there's intense competition for houses in the $500,000 - $900,000 spectrum by first-home-buyers.

There's every likelihood that Auckland house prices (average & median) will increase significantly over the next 12 months.

TTP"

Surely migration has nothing to do with our worsening housing woes or slowing wage growth. We've been assured of it scores of times in the past decade by bank economists .

Not saying anything about causation or correlation, but I find this very interesting - https://ibb.co/zV9rNhx

so if 4,699,089 is our population and at an average of 3 persons per dwelling, dont we have any oversupply of dwellings?

am i missing something?

The numbers include unoccupied dwellings aswell. And overall population growth increasing a higher rate than the number of new dwellings being built

your name really suits you.. you couldnt have chosen a better moniker

YDB makes a valid point, there's no need being rude

Right. Certainly the total dwelling count includes thousands of holiday homes built in remote locations where people don't usually live.

Exactly. Dgm didn't read the fine print. Just wanted to spout his nonsense opinion lol

ah, so didnt like my compliment...

You are not being funny neither subtle, you are just being obnoxious, it's plain for all to see

welcome back... but you were not missed.. esp, your comments

Dgm 0 - 1 Me

ok, the reason i passed that remark is that you came back with an unfounded statement to my question...

have you done your math before passing that comment..

you obviously havent.. stats nz has provided the unoccupied % of dwellings.. c'mon now reassess your statement..

All I did was point out that the figures included occupied and unoccupied dwellings. Somehow you took offence to that. Yvil has a valid point - you are being obnoxious lol

you def. sound like yvil's twin..

statements without facts and gloat about it

Observations came straight from the article. Maybe you've got an issue with the facts?

Should be another column for average occupancy rates. I suspect that most new houses are built for more than 3 or more people to occupy - tend to be families moving to new builds on urban boundaries, new builds tend to be bigger than older houses. NZ averages occupancy of 2.5. So this table does not actually necessarily indicate that housing 'pressure' is worsening.

based on 2013 census, average for nz is 2.7, while for auckland it was 3...

based on the size of houses built between 2013 and 2017, at an average size increasing.. the average for nz should have increase to closer to 3..
while for auckland closer to 3.5...

Yep so for Auckland supply is closely matched to demand.
The big shortage is BS,

its just amazing that nz has lack of insights and only follow media/economist propaganda...

Very shallow thinking.
But look on the bright side. This under supply BS has helped support a building frenzy, which will either limit price rises or result in falls.

Considering this census was an unmitigated disaster, with record low response rates, potentially these pop numers are literally completely meaningless.

An independent data quality panel has assessed it and given it a thumbs-up. You can read their endorsement in their press release and 98-page report here: https://www.stats.govt.nz/news/2018-census-external-data-quality-panel-p...

Auckland built less houses percentage change (6.5) than BOP (8.1) or Waikato (7.9), despite Auckland's enormous economies of scale (the basic Auckland Council level of stoopid does beggar belief). This all means Auckland is in an inelastic market with potential for catastrophic fall or stratospheric rise depending on which way demand moves.

its just dumb to look at houses built vs population increase, without taking other parameters into the equation.. such as residents per dwelling...

there has been a massive increase in the number of retirement villages, where a person living in a 3 bedroom house has moved into a one bedroom dwelling..

what happened to the speculation that NZ's population was close to 5M and aucklands was close to 1.7M???

Auckland Council is awful. Of our urban regional areas 3 had slow building rate percentage increases - Wellington 4.5%, Auckland 6.5% and Canterbury 6.9%. Wellington and Canterbury were subject to earthquake damage. Auckland was merely governed by Auckland Council.

Auckland Council is about as helpful to building as having earthquakes.

Thus far, no figures available on owner occupied v rental in Auckland and change since 2013.
Feeble.

Most immigrants by the way, are NOT in the age group with greatest income and potential for affording a mortgage. So, it would be nice if the auto pilot people who connect these things de rigour, thought first.
When Stats NZ actually gets its Auckland figures out for owner occupation % v renting, there will be something worth reading. However, the NZ figures stated that "558,000" persons "not stated" their status on this. Only 15%. Bloody useless

Averages are worse than useless in respect to persons per dwelling.
About 20% of Auckland pop live alone for a start.
It is helpful to look at what sells, in terms of bedrooms but still, people generally want more floor space and rooms and less land in last 10 years, than previously.
Basically, depending on pop over 65, in an area, you need to adjust (a bit arbitrarily) the ratio of persons per household. ie if its got a pop over 65 of over 40%, like Orewa, than you would be better using 2.25 rather than 3.
Whereas in SIlverdale virtually all stock is 4 beds and age profile is much lower, so you might be better using 3.5 there.
Unfortunately, these sorts of calculations are not attempted, or if they are, officialdom does not publish them, so that, cumulatively, we might work out whether per suburb there isa. shortage of housing or not.

Repeat after me: house price rises are NOT related to immigration or growth of population .
They ARE related to the amount of mortgage lending banks will give.
If they cannot arrow it, cannot buy it.
Also, as interest rates been falling for 2.5 years at least, and sales along with them, there is no linear relationship there either. I long for these "truisms" to be challenged as economists just trip them out....

Sure, credit availability is very important. But to say immigration or population growth have nothing to do with house prices in such a general and generic way is surely wrong. If number of dwelling in a specific area is fixed, but the number of people who want to live there is tripled, how this will not impact the price expectations? and surely, there are other underlying factors that have attracted such a significant increase in population in that area (which is likely to be positively related to the general value of things in that area). So if you hold any other potential variable constant (which is impractical as many of these variable are dependent on each other, but for argument sake), you surely cannot say population growth is not related to house prices.

Because if none of those people have access to *figure plucked from thin air* then how will houses sell for *FPFTA*?

Have to disagree with you on this one. If all things remain equal (ie supply), of course more people moving to an area will increase demand for the limited stock in that area.

Some immigrants get very defensive about the notion that immigration might be generating negative impacts, as well as benefits, for this nation's citizens.
Shamubeel E. used to get very defensive about this. But I see recently he's calmed down, and has acknowledged high rates of immigration can be one factor in contributing to high housing costs as well as other negative externalities.
Maybe he's rightly stepped back and realised that questioning the desirability of our high rates of immigration does not equate to racism / xenophobia.

So every immigrant and every baby born is deemed to require its own dwelling? Is this really the quality of analysis that is coming out of the Census? Obviously, every child born will be living with its parents so does not require an increase in the number of houses built. Immigrants may arrive and move in with friends and family, or flat share. Immigrants may be a family of 4 who only require 1 dwelling. You cannot claim there is an "undersupply" of housing unless you know the type of population addition (child or immigrant), where that person is residing, and how many people are residing with them.

If there's not a shortage of housing, then why are rents and house prices so high?

House prices are high because of low interest rates and slack credit criteria, allowing borrowers to borrow more, and therefore pay more for houses. Rents are rising because landlords are exiting the market by selling their houses to owner occupiers (see above point) rather than new investors. It was pretty obvious what the outcome of restricting borrowing to investors was going to achieve - less investors in the market, less investment properties available to rent, and higher rents for the ones that are left.

I understand your explanation K.W makes sense. I just wonder how many owner/occupiers can actually access credit given the still quite substantial 20% deposit

Gosh. Who knew? It's got so bad it is finally showing up in the official numbers. You would think seeing homeless people on the street would have been a bit of a clue.

Yes exactly Roger you don't need a census, that by the way was a total mess and so fraught with errors its simply not usable anyway not to mention the huge percentage of people that didn't do it in the first place. The evidence is already clear, to many people coming in each year and not enough suitable housing to match the influx.

The census was a mess/disaster. Next time it will be solved by NZ's universal solution to all problems: bring in more immigrants to do the job - when they have finished they can convert to being skilled builders.

No, Labour will just declare that the Census no longer matters and nothing needs to be counted or measured any more. Just like immigration, the Budget, GDP. Its all about how you "feel" these days.

dp

Most of the respondants aren't examining housing pressures from 360 degrees. I offer three scenarios that have unsettled me. Firstly, international language schools. These involve hundreds of students, no school I have encountered builds its own accomodation, so where do they stay? In the same houses that a citizen might seek to rent. Alarmingly I have heard of international students who buy a house to occupy so thats an added concern. Next is a foreign 'business owner' who buys houses for his 'staff' to live in while he extorts them for their visa status. Another house you can't rent. Lastly is the foreign owner who rents beds in a house to the low value immigrants who have been pouring into the country since at least 2012...the guys and girls who uber and serve your petrol. Yet another house you can't rent. You can't tell me we aren't creating our housing crisis. Turn off the taps, close the gates. Where is the long term sustainable plan?

Can you please point me to someone, anyone who thinks that there is an undersupply of housing in Christchurch/Canterbury? Because for years, all I've heard is that there was a massive building boom, and the area is now over supplied with housing. Yet according to the Census, there was an 11.2% increase in population but only a 6.9% increase in dwellings. Almost exactly the same as Auckland. So if Canterbury is considered oversupplied, how is it possible that Auckland is undersupplied - when both have the same stats?