The pace of construction of new houses now exceeds the rate of population growth, a recently published report says.
Interest.co.nz estimates that New Zealand’s population increase of 12,700 in the last 12 months would have created demand for an additional 4885 new homes. However, it is likely that around 37,000 new homes were completed during that period, meaning that an excess of houses was built relative to the increase in population.
New Zealand has faced a housing shortage for over a decade, so the increase in housing supply is expected to ease some of the current problems.
However, because house building didn’t keep pace with New Zealand’s fast-rising population for many years, the current housing shortfall will take some time to address.
“I don’t think we are moving toward an oversupply,” said Satish Ranchhod, Westpac senior economist. “But the balance between demand and supply will undergo a big transformation over the next few years. We’ll have more houses per capita than we’ve seen for some time.”
The turnaround in supply is a result of immigration being turned off by pandemic restrictions in March 2020, while the construction of new houses continued to increase.
It is likely that the increase in supply will reduce rents and contribute to the downward trend in property prices.
