New estimates showing much lower levels of migration have probably reduced the size of Auckland’s housing shortage but it hasn’t gone away

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By Greg Ninness

A change in the way long term migration is measured has resulted in a sharp decline in the estimates of how many migrants are settling in New Zealand.

And with fewer people coming here to live, it has also cast doubt on the extent of the housing shortage, particularly in Auckland where housing pressures from migration-driven population growth have been greatest.

While it would be nice to think that Auckland’s housing shortage was nothing more than an urban myth, a close look at the new numbers suggests otherwise.

The new, lower migration figures suggest that Auckland’s housing shortage may not be as severe as previously thought, but it is still likely to be substantial.

Interest.co.nz has been estimating the size of Auckland’s housing shortage for several years, based on the natural increase in the region’s population (the excess of births over deaths), the net gain from migration (the excess of long term arrivals over long term departures), average household occupancy and the number of Code Compliance Certificates issued for new dwellings in the region each year.

That data is summarised in Table 1 below, which shows that over the four years from 2015 to 2018, an accumulated shortfall of 27,206 homes built up in the Auckland region, which suggests the total shortfall would be much higher.

However Statistics NZ has revised the way it collects migration data, and this has shown a big drop in the number of people settling in this country on a permanent or long term basis, compared to the previous method.

The differences are summarised in Table 2 below, which shows that under the old system, Statistics NZ estimated a net migration gain of 58,259 people in the 12 months to June 2015, but under the new system, that figure was revised down to 53,208, which means 5051 fewer people (-8.7%) settled here than originally thought.

Table 2                           NZ’s Net Migration Gain
Old Statistics NZ estimates compared to new estimates
Year to JuneOld estimateNew estimateDifference% Change
201558,25953,208-5051-8.7%
201669,09063,773-5317-7.7%
201772,30558,625-13,680-18.9%
201864,99546,634-18,361-28.2%

As the table shows, that variation got greater each year. In the 12 months to June 2018, the old system showed a net gain of 64,995 compared to just 46,634 under the new system, or 18,361 fewer long term migrants (-28.2%) under the new system.

That would almost certainly have reduced the size of Auckland’s housing shortage, but by how much?

Unfortunately the revised migration data is only available at the national level and the regional data still in the pipeline.

However we can get a rough idea of how the Auckland numbers might be affected by reducing them by the same percentage changes that applied to the national figures.

In other words, because the national net gain from migration was 28.2% lower under the new system compared to the old one for the 12 months to June 2018, we’ll assume the Auckland figures were reduced by the same amount.

That produces a rough measure, but at the moment it’s the best we have.

Table 3 below shows the effect those rough estimates would have had on the calculations for Auckland’s housing shortfall from 2015 to 2018 (June years).

In the year to June 2015, the housing shortfall declined from 8919 under the old system, to 8075 under the new system and the following year it declined from 8036 to 7246.

The differences were even more apparent over the next two years, with the shortfall for 2017 dropping from 6817 under the old system to 4996 under the new system, and in 2018 it dropped from 3434 to just 1027.

By that measure, the accumulated housing shortfall that built up in Auckland over the four June years from 2015 to 2018 would have declined from 27,206 under Statistics NZ’s old system of migration measurement, to 21,314 under the new system (-21.7%).

So Auckland’s housing shortage has not gone away, it’s probably just around 20% smaller than we thought.

What’s even more interesting are the trends that the figures highlight.

Both sets of numbers show that the net gain from migration has been slowing while Code Compliance Certificate issuance has been increasing.

As a result, the annual shortfall has been decreasing and the new figures show that for the year to June 2018, the annual shortfall was just over a thousand homes.

Given that the figures are now more than six months old, and that in the second half of last year the net migration gain continued to decline (whatever system was used for the calculations), it is quite likely that Auckland’s housing shortage has flattened out and may even be starting to decline.

That doesn’t mean a surplus of homes is is likely to appear over the horizon any time soon, because the accumulated shortfall will keep the Auckland housing market extremely tight for some time.

But at the least it shouldn’t be getting any worse and pressures may even be starting to ease.

Although our calculations are just rough estimates, they should be reliable enough to give an indication of the broad trends in the Auckland housing market.

And we’ll continue to update our figures as more reliable data comes to hand.

Table 1.    Auckland’s Growing Housing Shortage   –  Year to June 2015-2018 Based on Statistics NZ’s Original Estimates (Old format)
Year to June Natural increase in populationIncrease from net migrationTotal Increase in populationEstimated no. of new dwellings needed

No. of new dwellings completed (CCCs issued)

Annual housing shortfallCumulative housing shortfall
201513,90029,10043,00014,333541489198919
201613,50030,80044,30014,7666730803616,955
201713,80028,90042,70014,2337416681723,772
201813,00025,600**38,60012,8679433343427,206

 

Table 3.    Auckland’s Growing Housing Shortage   –  Year to June 2015-2018 Based on Statistics NZ’s Revised Estimates (New format)
Year to June Natural increase in populationIncrease from net migrationTotal Increase in populationEstimated no. of new dwellings neededNo. of new dwellings completed (CCCs issued)Annual housing shortfallCumulative housing shortfall
201513,90026,56840,46813,489541480758075
201613,50028,42841,92813,9766730724615,321
201713,80023,43837,23812,4127416499620,317
201813,00018,38131,38110,4609433102721,314

*This article was first published in our email for paying subscribers early on Friday morning. See here for more details and how to subscribe.

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