01.03.06 :: Terrence Aschoff, Manager CHRANZ

The Centre for Housing Research, Aotearoa New Zealand (CHRANZ) has released research from Motu that investigates changes in regional housing markets in New Zealand between 1981 and 2004. The project was jointly funded by CHRANZ, the Department of Building and Housing (DBH), and Housing New Zealand Corporation (HNZC).

The authors (Arthur Grimes and Andrew Aitken, Motu) said “housing is such an important component of personal wellbeing that it is vital to understand how the supply of accommodation responds to changes in housing needs. In the face of affordability concerns, it is important also to understand what determines the price of housing. For instance, are rising construction costs or rising land prices the primary driving force behind the strong house prices we have witnessed in New Zealand?”

The key findings include:

• Real (CPI-adjusted) house prices have risen substantially on average across New Zealand (at 105%) between 1981 and 2004, but there has been a strong divergence in regional house price growth. Major urban areas and sun-belt destinations report the strongest growth. Areas with negative or low real price rises are predominantly rural North Island or southern South Island regions.
• Land prices have increased at a significantly faster rate than housing prices, with a wide regional variation. Between 1981 and 2004, the real price of vacant residential sections rose by 286% on average across New Zealand.
• From the modelling, land prices appear to have made the greatest contribution to the growth in house prices.
• The growth of investment in sun-belt destinations (retirement, holiday home and tourism destinations) is another key factor affecting house and land prices.
• Territorial local authorities differ substantially from one another in the responsiveness of new housing supply to population pressures.

The authors recommend that if high house prices are a concern, a key policy focus has to be ensuring that construction costs and land prices are kept to a minimum consistent with other objectives (e.g. ensuring adequate building standards and appropriate land use for the community, and that environmental impacts comply with the Resource Management Act). In turn, this requires planning and regulatory processes that are conducive to the development of residential land (or of in-fill sub-division of existing land) and to the construction of new dwellings (whether single or multi-unit). The appropriate forms of regulatory and planning processes that result in these outcomes needs to be a subject of close scrutiny in New Zealand.

A full copy of the research report is available online. A copy of the CHRANZ Research Bulletin is available online.

For further information please contact:

Terrence Aschoff
CHRANZ
terrence.aschoff@chranz.co.nz
Phone: 04 439 3326

or

Arthur Grimes / Andrew Aitken
Motu
Phone: 027 2489 389