Research examines economic impact of migration on housing

06 june 2008

Research commissioned by the Department of Labour has found an association between New Zealanders returning home and local house price increases between 1986 and 2006, but not with new immigrants.

The report Housing Markets and Migration: Evidence from New Zealand found that while population growth and house prices increased together over the period, there was no evidence to suggest that the arrival of new immigrants had had an impact on local house prices.

It was unclear what was driving the association between returning New Zealanders and house prices, and whether returning New Zealanders had in fact been one of the causes of rising house prices or had more simply moved home to areas that tended to have higher than average price increases.

The research findings indicate that both the flow of migrants - new immigrants and returning New Zealanders - and house prices are affected similarly by other common factors, which could include a strong economy, high income and employment expectations.

Overall, the research found a positive link between population growth and house prices. For example, a one percent increase in an area’s population was associated with a 0.2 to 0.5 percent increase in house prices. The impact on rents was found to be lower.

The Housing Markets and Migration: Evidence from New Zealand research was conducted by Motu Economic and Public Policy Research, an independent, non-profit research institute that carries out long-term, socially beneficial research programmes. This research is the first of its kind in New Zealand conducted at such a detailed level of analysis.

The work was funded by the Royal Society of New Zealand Marsden Fund and the Department of Labour, and is part of the Department’s three-year research programme, Economic Impacts of Immigration (EII), which began in 2005.

Researchers investigated the relationship between changes in population size and house and apartment sale prices and rents in local areas. Population change was broken down into new immigrants, New Zealanders returning from abroad and New Zealanders and previous immigrants moving from other regions within New Zealand. Data was combined from the 1986 to 2006 censuses, Quotable Value New Zealand and the Department of Building and Housing.
Another recently completed EII programme research paper The Economic Impact of Immigration on Housing in New Zealand 1991-2016 found that household status (single/couple) and not birthplace (migrant/New Zealand-born) was the major determinant of housing behaviour.

The report found that recent migrants were more likely to rent homes than the New Zealand-born population, but that longer-term, rent/ownership levels were similar to the New Zealand-born population.

It also found that the capacity of the building industry appeared to be adequate to meet the level of housing demand to 2016, even under a high immigration scenario, as long as the type of accommodation built changed to meet changed demand; that there would be a growing demand for private rental market dwellings; and that the proportion of people living in flats or apartments was likely to increase.

The research, carried out by BERL on behalf of the Centre for Housing Research Aotearoa New Zealand (CHRANZ) and the Department of Labour, explored the links between immigration and housing demand and supply. Using census data for 1991, 1996 and 2006 it investigated the past housing behaviours of five types of households: migrant couples, New Zealand-born and migrant couple, New Zealand-born couple, single migrant and New Zealand-born single. Migrant households were further classified as ‘recent’ (fewer than five years), ‘intermediate’ (5-15 years) or ‘earlier’ (15+ years).