The New Zealand National Government’s single-minded focus on solving the nation’s housing crisis by boosting dwelling supply continues to fail.
In 2016, New Zealand added a whopping 100,000 residents, more than 70% of which came from net migration:
The bubble hotspot of Auckland has been the primary recipient of the population influx, with Statistics New Zealand revealing that Auckland’s population had grown by around 200,000 (over 13%) in just four years, with the region’s population also projected to grow by between 37% (low growth scenario) and 75% (high growth scenario) between 2013 and 2043:
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Meanwhile, Statistics New Zealand this week revealed that construction momentum has slowed across New Zealand, with trend number of new homes consented decreasing 15% in the five months to January 2017:
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According to the figures, there were 30,123 new dwellings consented across New Zealand in the year to January 2017, with just 10,032 consented in Auckland.
In addition to driving-up house prices to all-time highs, the inability of dwelling construction to keep up with New Zealand’s immigration-led population growth has also led to surging rents, which hit an all-time high $400/week nationally in February. From Interest.co.nz:
The national median rent for newly tenanted properties hit $400 a week for the first time in February, according to data compiled by interest.co.nz from tenancy bonds collected by Tenancy Services.
That was an increase of $20 a week (5.3%) compared to February last year…
Some of the biggest increases over the last 12 months have occurred in places that have some of the highest proportions of people on low incomes, such as Manukau and Franklin in South Auckland and Porirua in Wellington, where the median rents have increased by $30 a week between February 2016 and February 2017…
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The incumbent National Government of New Zealand continues to face immense pressure over the issues of housing and immigration, which threatens a voter backlash at the upcoming general election on 23 September 2017.
Like the Coalition Government in Australia, the National Government has pinned the blame for Auckland’s housing crisis on a lack of supply and rigid planning, without addressing the many demand-drivers under its control that are also making housing unaffordable to rent or buy.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
