New Zealand Housing Market Updates: Changing Demand and Supply Dynamics

Statistics NZ provides the estimate of decrease in natural demand for housing in New Zealand. The increase of 21,200 was witnessed in June 2021. However, this figure has dropped to 12,700 in June 2022. Moreover, this is much below than the average demand 94,800 a year, witnessed from 2018 to 2020.

Generally, it takes two years for dwellings to take the shape from the moment of their consent. It is an indicator that the supply takes more time to adjust to the demand. However, the unpredicted pandemic restrictions suddenly halted the immigration, which led the supply to remain stable but caused the demand to decrease substantially, hitting the New Zealand housing market hard.

Besides the pandemic and its implications on immigration, the natural population growth also slowed down, causing the dwellings to remain unutilized. Interest.co.nz estimated that the housing demand rose to approximately 10,000 in the year 2020. The current supply would have eliminated the housing shortage that was seen due to the increasing number of immigrants and growing population.

New Zealand housing market updates show that the current situation of exceeded housing supply over the demand is putting pressure on residential property investors in a substantial way. The affects will be apparent in form of decreasing property prices, lowering rental values and eventually decreased capital values.

New Zealand housing market updates

The major housing surplus in 2022 can be seen in Auckland, Canterbury, Otago and Wellington. The data for Auckland indicates an approximate population loss of 19000 and the increase in supply of dwellings by 35,386. In Wellington, the housing supply was 2655 against the demand of 664, causing the surplus to be 1991. Otago witnesses the decrease in requirement. When the supply is 2179, the requirement as well decreases with decrease in population by 350 and the demand of new houses by 145, causing the surplus to be 2324.

The data provided for the year 2022 shows, the surplus in Auckland by 17,860 as the estimated new dwellings are 14,780 while the requirement of new housing decreased by 3080. Otago sees the surplus in housing by 2248. The requirement, as well, is increased but marginally by 580, still keeping the higher number of dwellings unutilized. Similarly, there was marginal increase by 1928 in demand in Canterbury against the supply of 5771, causing the surplus of 3843.