This story in the NZ Herald on Tuesday – Rents fall in Auckland, rise across New Zealand – may be one of the most important stories that newspaper has published all year. It suggests – in support of my recent analysis of New Zealand migration data – that, far from being inundated by immigrants, the population of Auckland may be static or even falling.
From 2013, New Zealand’s net migration has entirely comprised people identifying as New Zealand residents returning from short visits (less than a year) overseas, minus the same group of people embarking on short visits overseas.
This seems rather odd, and it reflects statistical classifications not keeping up with the increased international mobility of a significant minority of New Zealand residents (enabled in large part by air-fares falling relative to many people’s incomes), as well as the fact that increasing numbers of New Zealand residents do not travel on New Zealand passports. The statistics suggest that – of that quite large pool of people practically resident in more than one country – more of them are spending more of their time in New Zealand.
There is nothing whatsoever in the migration data suggesting that Auckland, since the 2013 census, is affected in greater proportion than the rest of New Zealand by net immigration. Rather the New Zealanders who are staying put instead of going to Australia are mainly from outside of Auckland.
It’s only in the census that we get reliable data on regional population shifts. It is true that, prior to 2013 – essentially since the 1891 census – there has been net internal migration into Auckland, or at least into Auckland ‘province’; the so-called ‘drift north’. The anecdotal evidence – and that’s all we have got – is that since 2013 increasing numbers of Aucklanders have sold up and used their capital gains to settle elsewhere. Indeed Paula Bennett, Minister of Social Housing, wants poor Aucklanders to resettle elsewhere. Further, increasing numbers of non‑Aucklanders have been put off from moving to Auckland because of the prices of houses, perceived high rents, and the perception of traffic gridlock. Immigration New Zealand incentivises new New Zealanders to settle out of Auckland. Immigrant seasonal workers are mainly employed outside of Auckland. And international students go to many places other than Auckland.
Yes, Auckland has some overcrowded schools – eg in Manurewa, which is almost affordable for the growing numbers of working poor. Other parts of Auckland have distinctly undercrowded schools, as families leave, selling their homes to isthmus land-bankers.
The result of a lack of immigration into Auckland is the static – now falling – price of rental accommodation. Yes, Auckland rents are still higher than in the rest of the country, in part because possibly 60 percent of all Accommodation Supplement dollars are paid to Auckland tenants and mortgagors. But the rent gap is closing, and genuine housing investors – people seeking rental yield rather than capital gain – find that it makes much more sense to buy in the provinces.
A prediction. On the basis of the sluggish Auckland rental market, the end of the Auckland property bubble could be sooner rather than later. (I’m picking October 2017, a month or two after the 2017 general election.) The ‘correction’ will come when enough people who have bought in Auckland for capital gain realise that they will have to sell soon, or risk the consequences. As well as rental prices, the statistics to watch are increased listings of isthmus properties, and increases in the average time it takes for isthmus houses to sell.
Auckland does not need to give up its green places by dramatically increasing its supply of outer-suburban houses. New empty houses on the fringe are no more use than old empty houses in the inner suburbs.
Market forces – as revealed by rent price statistics – suggest that scarce labour and land resources should not be disproportionately allocated to Auckland house construction. Rather Auckland needs further improvement in city public transport – especially rail, and light-rail along places like Dominion Road and Manukau Road – and more people (especially young people, with and without children) living in quality rental accommodation in the isthmus suburbs.