Regional Housing Markets in New Zealand: House Price, Sales and Supply Responses

Produced for the Centre for Housing Research Aotearoa New Zealand, Department of Building and Housing, and Housing New Zealand Corporation, Wellington

House prices have risen substantially across much of New Zealand since 1981, but regional house prices have diverged. This study provides evidence on house and land prices and housing supply at the local level to underpin research into issues of sustainable housing supply across New Zealand.

We detail:

• house price movements,
• demographic and economic developments, and
• regional housing supply patterns.

The responsiveness of housing supply to demand changes determines the extent of regional house price rises. Fast supply adjustment following a demand increase results in the extra demand being met by matching extra housing supply with little effect on prices. Slow supply adjustment results in the demand increase being reflected principally in house price rises. We explain determinants of long-run developments in house prices and determinants of house supply responsiveness.

We estimate that a 10% increase in regional house supply (relative to population) results in an approximate 8% decline in house prices in that area.