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 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. Conditions had to be met such as the type of accommodation built needed to change to meet changed demand; 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).