From famine to feast

New housing supply far exceeded an anaemic rise in new housing demand over the past year. New Zealand’s housing shortage shrank to an estimated 23,000 homes in the year to June, from a revised 57,000 homes last year.

Since then about 41,000 houses have been built despite the disruption from Covid, despite the lack of materials, and despite the difficulty finding staff, according to Statistic New Zealand data.

This is well short of the Reserve Bank’s prediction house prices will fall up to 20% from their peak. Reserve Bank Governor Adrian Orr says prices are now coming back to what the bank considers a sustainable level and that is a good thing as it removes financial stability risk.

In its latest Inner Kiwi publication, senior economist Jeremy Couchman says that is by far the largest addition to the country’s housing stock in the data going back to 1991. At the same time, new housing demand has slowed to a trickle as population growth has hit the lowest rate since the 1980s.