New Zealand: Immigration Drives House Price Rises

An interesting article appeared in New Zealand’s Sunday Star Times over Easter linking New Zealand’s booming property market to high numbers of immigrants – particularly British immigrants who have plenty of capital after selling their houses in the UK.

Auckland estate agent Peter Ayton discussed the effects of immigration on house prices, telling the Sunday Star Times:

“I think it’s very important. There are two main things driving the very large increase in values. One is immigration, predominantly from Britain, and the other is expat Kiwis buying little bolt-holes …”

In the past six years 128,000 more people have arrived to live in New Zealand permanently than have left. The average immigrant household contain two people, so 128,000 extra people means an extra 64,000 houses.

Meanwhile New Zealand’s natural increase in population, because births outnumber deaths, means a further 44,400 extra houses were needed over the same period.

It appears that more houses are needed to accommodate immigration than to accommodate New Zealand’s natural population increase. The fact that these migrants bring with them more capital than a typical first time Kiwi house buyer has means they have a strong upward effect on house prices.