Housing supply has kept pace with population growth, it’s just that there are fewer properties available for homeowners to buy, according to a real estate analyst.
The post-lockdown housing market boom had seen house prices soar and the lack of supply was often cited as one of the main reasons for this.
But new analysis by Homes.co.nz chief executive Jamie Kruger has suggested that the supply of property to buy has not been overtaken by population growth.
Kruger used Statistics NZ population and housing figures to determine what the ratio of properties (owner-occupied and rental) to population was in 1991 and 2021.
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In 1991, there were approximately 1.28 million properties and a population of 3.53 million, which equates to a property to people ratio of 0.361.
Thirty years later, in 2021, there were 1.87 million properties and a population of 5.1 million, giving a property to people ratio of 0.367.
This meant that the number of additional properties added to the national housing stock was sufficient to support population growth, he said.
But while supply had kept pace with population growth, Kruger’s analysis also showed a significant increase in the percentage of homes that were rentals rather than owner-occupied properties.
In 1991, 311,000 of the 1.28m properties were rentals. This meant that rentals made up 24% of the housing stock.
But in 2021, 621,000 of the 1.87 million properties were rentals, meaning 33% of the housing stock was now rentals.
Kruger said that over the past 30 years an additional 586,000 properties had been added to the housing stock, of which 306,000, or 52%, were rentals.
That’s a double increase from historical averages, and the ratio of owner-occupied to rental properties has gone from one in four to one in three over the past 30 years, he said.
It also meant that most of the additional properties were bought by investors, rather than owner-occupiers, and rented out.
If the percentage of rentals had stayed the same between 1991 and 2021, there would be about 450,000 in the housing stock, he said.
“But there are 612,000 rentals now, so it looks like investor activity has taken around 171,000 properties out of the owner-occupied housing pot. This is a 12% reduction in owner-occupied properties.
“So there seems to be less property for homeowners to buy, even though total supply has kept pace with population growth.”
Kruger said while the analysis was not in-depth and did not include factors such as household size and the number of rooms in a property, it suggested the problem was not with the number of rooms. properties, but who was buying the property from.
“The scale of property investment in New Zealand is an endemic problem. First-time home buyers struggle to enter the market, and many young people don’t aspire to buy a first home because they don’t see how they could.
It was an issue that would take a generation to change and should involve focusing on how to get people to diversify and invest in assets other than real estate, he said.
However, most housing supply data indicated a shortage. Kiwibank estimated the shortage at around 67,000, for example.
Infometrics economist Brad Olsen said if the supply of goods to population circumstances were looked at at the national level, there would likely be a general trend where they were balanced.
But regional variations and changes in the composition of the population and what they lived in were key and made a difference in the equation, he said.
“In 2019, we estimated the national undersupply at around 2,500 homes, but that was a net figure, so it took into account both undersupply and oversupply. But we estimated that the undersupply alone was around 40,000 nationwide.
There were some areas where housing supply and population were reasonably aligned, but there were other areas, particularly Auckland, that had significant undersupply, he said.
“Households are smaller or made up of fewer people now, so even though there are more houses, there are fewer people living in most of them. And there are also more people who remain in their family homes rather than moving as before.”
If the number of bedrooms had continued to match household composition, then the property-to-population ratio might work, but that hadn’t happened, Olsen said.
The latest figures from Realestate.co.nz also showed that the number of homes for sale was now at near record highs. Enrollments were down 33.3% year-on-year in June, and there were 14-year-high stock-outs in five regions.
Federation of Property Investors chief executive Sharon Cullwick said there was actually a shortage of rental accommodation in many areas.
Still, there was probably a greater need for rental housing than 30 years ago, she said.
Recent figures from the Department of Housing and Urban Development showed that more than 42,000 people were living homeless, in temporary or shared accommodation and that there were more than 23,000 applicants on the social housing register.
Public housing and private rental options were needed to solve this problem, she said.
“There will always be a part of the population that rents rather than owns, either because they want to or because they choose to.
“This is also the case overseas, but in New Zealand renting often seems to be seen as an inferior option, and it shouldn’t be.”