IDEAS home Printed from https://ideas.repec.org/a/taf/nzecpp/v55y2021i1p66-104.html
   My bibliography  Save this article

The causes and economic consequences of rising regional housing prices in New Zealand

Author

Listed:
  • Peter Nunns

Abstract

This paper explores the causes and economic consequences of recent increases and divergences in regional house prices in New Zealand. It identifies large and increasing ‘wedges’ between house prices and underlying supply costs. These house price distortions arise from the collision of rising demand for housing with housing supply constraints, including zoning rules that limit new subdivision and redevelopment of existing sites. Regions with larger starting price distortions appear to have experienced larger increases in house prices and rents in response to migration shocks. This results in large economic costs due to misallocation of labour away from high-productivity regions in New Zealand and increased net migration to Australia. A calibrated spatial equilibrium model is used to investigate what would have happened if house price distortions had increased at a slower rate in recent decades due to relaxation of supply constraints. This model implies that comprehensively removing constraints to housing supply would have increased New Zealand’s total economic output by up to 8.4%, increased per-worker output by 0.9%, and eliminated recent net migration outflows to Australia. More plausible counterfactual scenarios would result in smaller, but still economically meaningful, gains on the order of one to five percent of gross domestic product.

Suggested Citation

  • Peter Nunns, 2021. "The causes and economic consequences of rising regional housing prices in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 55(1), pages 66-104, January.
  • Handle: RePEc:taf:nzecpp:v:55:y:2021:i:1:p:66-104
    DOI: 10.1080/00779954.2020.1791939
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00779954.2020.1791939
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/00779954.2020.1791939?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michael P. Cameron & Jacques Poot, 2024. "Modelling and Forecasting Interregional Migration for Multiregional Population Projections," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 43(4), pages 1-37, August.
    2. Chao Li & John Gibson & Geua Boe-Gibson, 2022. "Rising immigration and falling native-born home ownership: a spatial econometric analysis for New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 56(3), pages 318-325, September.
    3. repec:grz:wpsses:2021-07 is not listed on IDEAS

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:nzecpp:v:55:y:2021:i:1:p:66-104. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: http://www.tandfonline.com/RNZP20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.