When 100 Martin St, Strathern, in Invercargill, sold recently, it was described as “perfect for first-home buyers”. With thee bedrooms, dining and separate lounge on 582 square metres, it was billed as walking distance to amenities and close to schools. It went for $225,000.
A month earlier, a three-bedroom home on 582sqm on Arapunui Avenue in Onehunga, Auckland, had changed hands. It was advertised as a 1940s house with generous open-plan living and dining areas, a sunny backyard and easy access to public transport and motorway links into the CBD. It sold for $1.05 million.
The difference highlights a division in the property market that commentators say is increasing, as some parts of the country struggle to keep up with demand for housing while others are more worried about ensuring they have the people to maintain their local economies.
New Zealand’s housing stock is worth more than $1.2 trillion over 1.626 million properties, CoreLogic data shows.
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The bulk of the country’s homes – 488,889 to be precise – are in Auckland and worth a combined $531.1 billion between them.
Christchurch has the next largest number at 142,243 worth $74.76 billion. Wellington has 68,397 residential properties, Upper Hutt 15,400 and Hutt City 35,987.
Gisborne was the region with the fewest homes, at 14,870.
Nick Goodall, head of research at Corelogic, said even with the largest number of homes, Auckland was struggling to come up with the right sort of housing supply for buyers.
It was restrained by its geography – there was only so much land available on the isthmus, which meant much of the development had to happen in the north and south. But that created infrastructure issues. The transport available in Auckland was not as good as it should be for a city of its size, he said.
“You end up with situations like KiwiBuild putting in a bunch of homes in a certain place but no first-home buyers want to live there because they’re looking at what their commute will look like.”
There was a disconnect between where homes could be built and where people wanted to work, live and play, he said.
That lack of supply boosted the prices of homes that were available.
Infometrics economist Brad Olsen said that lack of available land was a factor in almost all the markets in New Zealand where property values were significantly above the average – specifically, Auckland, Queenstown, Wellington and Tauranga.
There is $568,000 worth of residential property for every person in Queenstown. Auckland’s figure is $323,000 per person, and the national average is $246,000 per person.
“And it’s clear looking at the growth in house prices in these areas that these are four areas where land supply is constrained, which has limited additional construction even as demand has rapidly increased,” Olsen said.
“Other areas, like Invercargill, Whanganui, Gisborne, and Palmerston North, have lower average values, below the NZ average, and so appear to have greater land supply which has kept their housing stock value more in check.”
At the bottom end, there is $134,000 of housing per person in Whanganui, $135,000 in Gisborne, and $138,000 in Invercargill.
Paul Spoonley, a distinguished professor in the College of Humanities and Social Sciences at Massey University, said there was a mismatch between where the population was and where there was housing stock.
Spoonley said there would be population stagnation in two-thirds of the country’s territorial authorities and those areas would be the ones that saw house prices stagnate while other areas boomed.
“What that hides is the fact that there is an exodus of young people. Over 65s will increasingly dominate the community.”
Rural centres were increasingly experiencing an excess of housing, or more people living in houses that were much larger than they needed for their household size.
Census data shows that 405,000 people now live alone, 36,000 more than did in 2013. It was the second-most common household type in the most recent census, behind two-occupant households – at 519,561.
“Housing is not keeping pace with demography,” Spoonley said.
Most at risk of over-supply were areas of the central North Island and South Island, he said.
An indication was the relative cost of housing – such as the difference between Southland and Auckland, or Whanganui and Wellington. “There’s a tendency to talk up any increase in house price but for me it’s the relative cost of living in these areas that is more important.”
A Productivity Commission report last year said the death of manufacturing had created “zombie towns”.
The number of people working in Tokoroa dropped by 44 per cent between 1976 and 2013, Greymouth by 7 per cent, Whanganui by 5 per cent and Oamaru by 2 per cent. Levin experienced no growth and Invercargill lifted just 1 per cent.
Queenstown’s number of employed shot up 261 per cent, Tauranga 176 per cent, Rangiora 147 per cent, Kāpiti 129 per cent and Taupō 81 per cent. Auckland was up 79 per cent.
But another demographer, Natalie Jackson, said where populations were declining, they would take houses price with them, which would then eventually attract new population. “You really have to look at it over the longer term.”
Olsen said his organisation’s estimates for March 2019 indicated that New Zealand was 40,000 houses short, and almost 30,000 of those were in Auckland.
“Other areas, like Wellington and Rotorua, also appear to have an undersupply of housing, but at a much lower scale.
“New Zealand’s population growth, although slowing, still requires the country to continue building dwellings to ensure we can house everyone, and constraints around future developments, like RMA complexities and a lack of infrastructure investment and financing, could hamstring our ability to meet the needs of society.”
Auckland has 33 per cent of the country’s population but only 30 per cent of its houses. By contrast, Queenstown has 0.8 per cent of New Zealand’s population but 1.1 per cent of the housing stock. Queenstown houses are worth 2 per cent of the country’s total.
The 2018 census showed Auckland had an occupancy rate of 3.15 per household, compared to 2.94 in 2001. The rest of the country has a rate of 2.68. But Porirua has some of the highest overcrowding rates in the country.
“It’s important to recognise the cultural differences in areas that may explain this trend, with Porirua having a large Pasifika population who traditionally live together more so than other groups,” Olsen said.
Goodall said changing demographics could alter the perception of how much of an undersupply there was. “If people are living in homes then there is no problem. That’s a harsh way of looking at it.”