Immigration not to blame for housing crisis, MBIE-funded study finds

New research has challenged claims that immigration flows have driven NZ's housing crisis. Photo / NZ Herald

New research has challenged claims that increased immigration has driven New Zealand's housing crisis.

A just-published study out of Motu Economic and Public Policy Research analysed Auckland data from between 1986 and 2013.

While the number of foreign-born New Zealand residents had more than doubled over that period, the New Zealand-born population rose by only 8 per cent.

Over the same period, the average real or inflation adjusted house price increased by about 140 per cent.

"What we didn't know was the impact that different migrants were having on the housing market," Motu research fellow Dr Trinh Le said.

The research, funded by the Ministry for Business, Innovation and Employment, found a 10 per cent increase in local area population was associated with 4 per cent to 6.5 per cent higher house prices.

"Good years bring more net migration into New Zealand, and this leads to higher house prices," Le said.

"We designed our research to control for this and to try and discover how the size and mix of local population growth affects local housing markets."

After controlling for socio-demographic differences, the researchers found that moving New Zealanders put more pressure on house prices than the same number of immigrants would.

"We found no evidence that a higher share of new international immigrants is associated with higher house prices and there is little evidence of a relationship between who lives in a particular area and housing market prices."

The researchers also looked at the cost of rent.

"Housing provides shelter and is also an asset. House prices capture both aspects, while rent prices only capture the first," Le said.

The researchers found that rents do not respond much to population growth, although they were positively related to higher shares of recent movers, whether from inside or outside New Zealand.

"We find that migrating people manage to find places to live, with a large effect on the number of occupied dwellings. We are unable to identify whether this is a result of house building or higher occupancy rate," Le said.

"Overall, there is little evidence of increased crowding, with household size changing little over time.

"However, immigrants tend to live in larger households, suggesting a possible explanation for why immigrants put less pressure on housing demand."

Due to data availability, this research only looked at figures to 2013.

Since then, the population had grown at an historically high rate, with migration accounting for a large share of the change.

"Both population and house prices have increased substantially since 2013, but we have no reason to expect different results."

The study covered similar strong-growth periods – such as that between 2001 and 2006 - when average real house price increased by over 50 per cent.

While the report contained detailed analysis and findings regarding Auckland, the nature of the research meant no comparisons could be made with other regions.