We seem to hear every week from some pundit about a new plan to ease the pressure on the Auckland and Christchurch housing markets, when staring us in the face is the key driver of house price inflation in New Zealand.
2014 saw record net immigration top 50,000 for the first time ever (actually 50,900). 23,000 of those went to Auckland and 6,000 to Canterbury. Total gross new arrivals hit a new record high of almost 110,000. Fewer than 60,000 people left New Zealand.
If that meant every three people needed one house, Auckland must build 7,600+ new homes just to house the new arrivals! No wonder we can’t keep up! 2,000+ homes would be needed in Christchurch, which does not take account of the considerable number (unmeasured) of internal migrants moving from throughout NZ to work in Christchurch. Of the 57 houses rented by Iron Bridge in Christchurch in January 2015, 15 Kiwi families were first time renters in Christchurch having arrived to new jobs in the city.
Before we get all upset about reducing this migration pressure, the other way to look at it is to consider those that did not leave. Australian emigration fell by 20% in 2014. Only 24,000 went to Australia. So, our net migrant growth record occurred really through New Zealand being a great place to live and work. For the thinking Kiwi, the grass in Australia does not look greener when comparing job opportunities and cost of living prospects at present.
But, already we have had the doomsayers starting to appear. Martin Hawes in the Sunday Star Times article on the 1st February compares the Auckland property market with that of Dublin, Ireland where prices fell 50% during the Global Financial Crisis. This is a ridiculous comparison, as at the time Dublin’s, and the greater Irish economy was in the “can” with huge unemployment, people leaving in droves, the housing market massively over supplied and the country facing years of austerity measures to save the nation from going bankrupt. A different picture to that of New Zealand’s economy today.
Take a look at my next Iron Bridge BLOG (next week), and I’ll let you know the secret of the two golden numbers you need to consider, to work out the future direction of the housing market in New Zealand.
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