Private residential property investors pumped almost $25 billion into the economy and supported 126,000 fulltime equivalent jobs, according to a new report.
But the findings in the Infometrics report weren’t without challenge, with one economist saying it didn’t acknowledge owner-occupiers could equally contribute to the economy in the same way, and another describing it as a “lobbying tactic” that didn’t add to debate on how property investment could be done well.
The New Zealand Property Investors Federation-commissioned report found that, in the year to March 2024, private residential property investors directly or indirectly contributed an estimated $24.8b in economic activity to the economy, the equivalent of 5.9% of the country’s total gross domestic product (GDP) in 2024.
GDP is a snapshot of the performance of the economy, and is New Zealand’s official measure of economic growth, according to Stats NZ.
The country’s 317,000 property investors also sustained an estimated 126,000 fulltime equivalent jobs in the year to March 2024, the report found.
This represented 5% of the country’s 2.5 million fulltime equivalent jobs in 2024.
Federation advocacy manager Matt Ball told Herald NOW’s Business with Garth Bray they wanted to counter the narrative all property investors did was “buy and sell houses like [a game of] Monopoly, and then sit on a pile of cash”.
There was a lot of work in providing rental homes, Ball said.
“We want to highlight that activity, to get away from the narrative that nothing happens in the housing market … these are homes for people to live in, and if we just have a narrative of, ‘This is a useless, unproductive and speculative activity’ then it gets attacked, and then we get less of it.
“We don’t need less homes, we need more.”
Council of Trade Unions economist Craig Renney said he accepted the report’s findings, but questioned its framing.
Investor spending on renovations, for example, did boost the economy, Renney said.
“But what it never asks is would a [owner occupier] have also replaced the kitchen and the bathroom? They’d have contributed almost identically the same GDP.”
Renney, Labour’s Wellington Bays candidate in November’s general election, agreed owner-occupiers didn’t have to meet healthy homes standards.
But people also have their properties at a “higher standard if they’re living in it, than [compared to] a landlord”.
“[Owner occupiers] want to utility maximise, so they’ll spend money on their own property, because it’s an investment and a place of residence … a landlord is fitting [improvements] often to a budget, or a cash envelope which fits the rental market for that place.”
Simplicity chief economist Shamubeel Eaqub described the report as a “lobbying tactic” that didn’t add to the property investment debate.
“It’s a defensive mechanism for any of these groups … if you look at all the economic assessments, our GDP would be bigger than our [actual] GDP, right?
“It’s a lobbying tactic. I’m not entirely sure it does much in terms of adding any light on what it is we want to talk about when it comes to how we do property investment well in New Zealand.”
No one was saying property investment was wrong, but the country was grappling with how much money should be going into property investment at the expense of other investment, Eaqub said.
“If you look at where our money goes … in bank lending, credit in the economy, investment – we are much too heavy on housing, [and] not heavy enough when it comes to our businesses.”
Ball told the Herald the report wasn’t a comparison between owner-occupiers and investors, but to “call a lie” beliefs property investment wasn’t productive.
Property investors spent $4.1 billion on maintenance and improvements alone in the year covered by the report.
“You can’t say, ‘What if all these houses were owned?’, because that’s never going to happen … there’ll always be a market for rental property, so I don’t think that’s a fair comparison.”
He understood Eaqub’s comment that when all industries’ claims of economic impact were added “it might amount to more than [New Zealand’s total] GDP”.
But it was also important to acknowledge the work of their industry, and others.
“When politicians have bad housing policy, we get artificial constraint … that’s when prices spike … who gets blamed? Not the politician who maybe changed the laws, it’s the property investor.
“That was part of the reason we did this – to shine that light on property investment and what it actually does, but also to highlight we want good information [and], good housing policy that leads to a good supply and demand balance.”