The housing market is a fickle beast, prone to booms and busts that, at their extremes, can have remarkably little to do with how many people are actually looking for a place to live. But, in the long run, the market will always adjust to the balance between demand and supply. In this article we look at some of the longer-term insights relevant to the housing market from the 2013 Census.

New Zealand's population hit the 4.5 million mark in June this year with rising net immigration pushing annual population growth to a decade high. So are all these extra people leading to housing shortages?

Census data gives some deeper insights than just the number of dwellings versus the population. In particular, it suggests demand for smaller houses should be increasing relative to large houses. The population is ageing. For example, the 40 to 69 age bracket has risen to 38 per cent of the resident population as opposed to under 30 per cent in the early 1990s. Household structure has also changed, with relatively fewer large families. The number of persons per dwelling remains in a long-term gradual decline.

But somewhat counter-intuitively, we are building ever-larger houses. While rising land prices have seen the proportion of standalone houses fall from just over 80 per cent of the private dwelling stock in 1991 to just over 75 per cent by 2013, the average consent for a new dwelling averaged 198 square metres in March 2013, as compared to 174 square metres in early 2001 and 138 in the early 1990s.

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The Census data confirmed this trend. In 1991 less than 20 per cent of all private dwellings had more than three bedrooms, but by 2013 this has risen to more than a quarter. Smaller households but larger houses certainly puts an interesting angle on the "unaffordable housing" debate.

The Census also sheds light on the regional aspects of housing balance. It confirmed a northward population drift in both the North and South Islands, with above-average growth in Northland, Auckland, the Waikato and Nelson/Marlborough. Our largest city now accounts for a third of the nationwide population, versus 28 per cent in 1991. The 2013 Census data had lower estimates of Auckland's population than previously, which more than halved our estimate of the city's housing shortage from 30,000 to under 15,000 units. That goes some way to explaining why rent growth has remained so benign.

What does the Census have to add on the topic of the housing market as a source of financial stability risk?

About 34 per cent of households have an outstanding mortgage, while 31 per cent of all households own a dwelling without a mortgage. The proportion of dwellings owned with a mortgage is higher in the more expensive centres: Auckland (57 per cent) and Wellington (53 per cent). Interest rate increases therefore hit home-owners in these centres proportionately harder in cash-flow terms (though incomes are also higher in these regions). While home ownership rates have not declined by much (65 per cent versus 67 per cent in 2006), people are tending to get onto the housing ladder at a later stage in life.

The Census did not ask for details of how much mortgage debt was held, but this is likely to average around $180,000 per dwelling with a mortgage (both rented and owner-occupied), given the March RBNZ credit aggregates showed housing debt of about $180 billion in March last year.

House prices have roughly trebled since the early 1990s. Given the median incomes of homeowners ($72,200 for those owning outright; $84,900 for those owning via a trust) are considerably higher than renters (median $48,600), this has arguably been a case of the rich getting richer. Also, those who have been on the housing ladder for longer have, of course, tended to accrue more of the benefits. Around two-thirds of respondents over 40 have been at their current address for more than 15 years, versus a population average of 15 per cent.

But baby boomers, beware: how effectively this equity gets realised remains an open question. For any asset, but particularly illiquid ones, if a large number of investors attempt to exit through a small door at the same time, prices will fall. And house prices are currently stretched relative to both incomes and rents.

It is ironic that New Zealand has been building ever-larger houses at a time when the ageing population suggest a large relative shift in preferences towards smaller houses is the future trend.

• This material is for information purposes only. You should seek professional advice relevant to your individual circumstances. While ANZ has taken care to ensure that this information is from reliable sources, it cannot warrant its accuracy, completeness or suitability for your intended use. to the extent permitted by law, ANZ does not accept any responsibility or liability arising from your use of this information.

* Sharon Zollner is Senior Economist at ANZ Bank.