New Zealand’s population has increased by roughly twice the size of Hamilton since 2018 — but our housing market appears to have digested the influx, commentators say.
Stats NZ data showed the population was 5.31 million at the end of December, up from 4.94 million in December 2018.
Natural increase — birth minus deaths — and net migration contribute to the increase, but arrivals from offshore have become a more significant part in recent years.
‘It is becoming less critical’
Infometrics chief forecaster Gareth Kiernan said, population growth outpaced new housing supply and associated infrastructure development through the latter half of last decade.
But there was a catch-up of housing supply in 2021 and 2022.
“There was still that sort of under-supply of housing and infrastructure leftover from the previous period since about 2012, where everything was speeding up but housing and infrastructure spend were not keeping pace.”
He said new dwelling building consents, now running at roughly 33,000 a year, could keep pace with the annual migration of 32,900 as recorded in February.
That was not the case when migration was at 113,700 the year before.
“Put it this way, it is becoming less critical than it has been. On housing infrastructure, it is a slightly different question because I think it’s still a longer gestation period around some of that stuff and you haven’t necessarily seen a whole lot of actual growth in terms of some of those areas where we need to make up for underinvestment.”
He said it was notable that the rate of growth due to natural causes had dropped significantly. That trend would continue as the population aged and meant New Zealand would be increasingly reliant on migrants to drive population growth.
‘Evidence suggests the imbalance has eased’
Corelogic chief property economist Kelvin Davidson said the overall population grew 7.5% between December 2018 and 2024 and CoreLogic’s records showed housing stock rose by 9.9% over the same period.
There are now large numbers of houses available for both sale and rent.
“Putting aside any effects from changing occupancy rates — people per house — and/or shifts in societal tastes in terms of property type/size, there’s evidence there to suggest any supply/demand imbalance has eased.
“Certainly, the general vibe on the ground at present is that the market is fairly well balanced, and reflects the large construction boom we’ve had in previous years.
“Any shortages that were prevalent in the past don’t seem to be an issue now, which adds to the case for thinking that the next phase for house prices could be fairly subdued.”
But BNZ chief economist Mike Jones said the bigger picture was still that New Zealand had underbuilt housing relative to population requirements for a long time.
“The resulting shortfall of houses has, at times, contributing to outsized gains in NZ house prices and rents. None more so than during the Covid period where a pre-existing housing shortage created tinder box conditions for house prices once a bit of demand stimulus started to flow through.
“Some of these dynamics have shifted more recently. The 2023 boom in population growth has well and truly deflated. And even though residential building activity has slowed down sharply, population growth looks set to track below that of the housing stock at least for this year.
“Getting a proper handle on the size of the housing demand/supply balance is fraught with difficulty. But whatever your current estimate, these dynamics point to some reduction in pressure from here. I don’t think it’s any coincidence that we’re seeing the market balance in both the rental and real estate markets tilt towards excess supply, with rents falling in some parts of the country and house prices going nowhere despite big falls in mortgage rates.”
‘Housing and infrastructure has not kept up’
Elham Bahmanteymouri, a senior lecturer in urban planning at the University of Auckland, said New Zealand had not made more of the economic opportunities that were possible through increased population growth.
“Population growth stimulates productivity, it brings a healthy type of inflation to our economy if we manage it well.
“But unfortunately in these past years, especially post 2018, we really didn’t use the opportunities. Housing and infrastructure planning has not kept pace.”
She said there needed to be a wider view taken to provide a better plan for growth, whether that came from immigration or natural population growth.
Supply side constraints on housing, transportation and social and physical infrastructure had led to affordability issues and pressure on existing services.
“We need a more innovative approach to the problem… we need long-term plans.”
rnz.co.nz