Housing Markets and Migration:Evidence from New Zealand At a Glance

Published: June 2008 – Economic Impacts of Immigration Working Paper Series

DESCRIPTION

This paper investigates the relationship between changes in population size and housing sale prices and rents in local areas. Population change is broken down into new immigrants, New Zealanders returning from abroad and New Zealanders and previous immigrants moving from other regions within New Zealand. Data is combined from the 1986 to 2006 censuses, Quotable Value New Zealand and the Department of Building and Housing.  

This research is the first of its kind in New Zealand conducted at such a detailed level of analysis. It was conducted by Dr Steve Stillman and Dr Dave Maré, of Motu Economic and Public Policy Research, and is part of the Department of Labour’s Economic Impacts of Immigration research programme.

LINK TO FULL REPORT

Housing markets and migration: evidence from New Zealand

SUMMARY

Overall, population growth and house prices were found to be associated during the period 1986-2006. 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.

However, findings indicate that the link between migration flows and house prices may not be causal, but that they are both impacted similarly by other factors such as the strong economy and expectations.

The source of population growth was broken down to separate impacts that new immigrants, New Zealanders returning from abroad and movement within New Zealand have had on house prices.

Although immigration flows are an important contributor to population change no evidence was found that the in-flow of immigrants has had an impact on house prices.

Local house price increases are more associated with where returning New Zealanders settle than where immigrants live.

However, it is unclear what is driving this association; whether returning New Zealanders are increasing house prices or whether they are moving back to areas that have tended to have higher than average price increases.  

Similar studies in the United States find a greater association between immigration and house prices. For example, a one percent increase in the immigrant population of local areas is associated with a one percent increase in house prices in the area.

It is likely that the reason the population effect is less in New Zealand than in the US is because other factors have changed to a greater extent than in the US. Although this research work is not able to identify these key factors, it is likely that a combination of supply constraints, increased employment and income expectations and the increased availability of credit, among others, have all contributed to swamp the population effect. 

RELATED INFORMATION

This report is part of the Economic Impacts of Immigration Research Programme

AUTHOR OR CONTACT DETAILS

For further information, please contact: research@dol.govt.nz

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