Author:Shane Martin, David Norman
Source:Auckland Council Chief Economist
Unsurprisingly, the biggest factors affecting house prices are population growth, (lack of) housing stock growth, and interest rate declines.
Further, the population’s preference is for fewer people per dwelling (PPD) than in the past. This means that, all else equal, housing supply actually needs to grow faster than the population to keep prices stable.
In slow-growing areas of the country, prices have remained subdued as house supply has easily kept up. But in Auckland, prices have risen sharply because too few houses have been built relative to the massive population growth, despite a large amount of land available to develop through the Unitary Plan.
Simply, a slow response in housing supply rather than lagging technical land availability explains much of the house price growth.
Insights. Topical commentary on the Auckland economy