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Abstract
This is a story of how economic reforms in New Zealand since the mid‐1980s changed conditions for investment in the property sector and have periodically distorted Auckland's housing market. The contribution of immigration and funds that migrants have brought with them, and their strong preference for Auckland as a destination, also help to account for the growth of Auckland and activity levels in the housing market. The opening up of the New Zealand economy in the last two decades has exposed Auckland to growth pressures that are now evident in the city's labour and housing markets.
Notes
Correspondence Address: Blair Badcock, Housing New Zealand Corporation, New Zealand. Email: [email protected]
The views expressed in this article are those of the author and not Housing New Zealand Corporation. The author is grateful to David Imray for preparing the figures and commenting on a draft of the article.
In each case, the property booms have come on top of economic recovery—the first over the period 1994–96 and the latest since 2000 with an improvement in the exchange rates and a consequential rebound in farm export prices.
A successful property investor now resident in the USA and author of Real Estate Riches: How to Become Rich Using Your Banker's Money.
A recent report noted that even former state houses sold off by governments during the 1990s are now beyond the reach of first‐time buyers in some market ‘hot spots’ in Auckland and Wellington (CitationO'Sullivan, 2003, p. A12).
If ‘empty’ dwelling, as distinct from where the occupant was ‘away’ on Census night, is used as a proxy for second homes in New Zealand, the number of ‘empty’ dwellings recorded by Statistics New Zealand almost doubled between 1996 (50 270) and 2001 (96 159). Since it takes about 13 000 owners to change the “home ownership ratio by one percent, this represents 7.4% of the current rate of owner‐occupation (67.8%)”. (I am indebted to Clive Thorpe at the Reserve Bank for pointing this out.)
Respective measures of wage growth from the Labour Cost Index and the Quarterly Employment Survey place annual growth in pay rates at 2.3 per cent in the year to June 2003, and 4.2 per cent in the year to May 2003 (CitationDepartment of Labour, 2003).
Currently, the unemployment rate is steady at around 4.8–5 per cent.