Housing supply has improved, but infrastructure and long-term planning challenges remain
New Zealand’s population has grown by roughly 370,000 people since 2018—about twice the size of Hamilton. Yet despite this rapid rise, property commentators believe the housing market has largely absorbed the pressure.
According to Stats NZ, the national population reached 5.31 million by December, up from 4.94 million in December 2018. The growth has been fuelled by both natural increase (births minus deaths) and net migration, with immigration taking a larger role in recent years, RNZ reported.
Housing supply catches up after earlier shortfalls
Infometrics chief forecaster Gareth Kiernan (pictured upper left) said housing development initially lagged population growth during the latter half of the last decade—but the pace picked up in 2021 and 2022.
“There was still that sort of undersupply of housing and infrastructure leftover from the previous period since about 2012, where everything was speeding up, but housing and infrastructure spend were not keeping pace,” Kiernan said.
He said with new dwelling consents now around 33,000 a year, they are roughly in line with current annual net migration, which sat at 32,900 in February—though this wasn’t the case during the 2023 migration surge, when net arrivals reached 113,700.
“Put it this way, it is becoming less critical than it has been,” Kiernan said. “On housing infrastructure, it is a slightly different question because I think it's still a longer gestation period... you haven’t necessarily seen a whole lot of actual growth in terms of some of those areas where we need to make up for underinvestment.”
He also noted that natural population growth is slowing, meaning future population increases will rely more on immigration.
Housing stock growth outpaces population growth
Kelvin Davidson (pictured upper right), CoreLogic’s chief property economist, said housing stock grew by 9.9% between December 2018 and 2024, outpacing the 7.5% growth in population over the same period, RNZ reported.
“Putting aside any effects from changing occupancy rates – people per house – and/or shifts in societal tastes in terms of property type/size, there's evidence there to suggest any supply/demand imbalance has eased.” Davidson said.
“Certainly, the general vibe on the ground at present is that the market is fairly well balanced, and reflects the large construction boom we’ve had in previous years.
“Any shortages that were prevalent in the past don’t seem to be an issue now, which adds to the case for thinking that the next phase for house prices could be fairly subdued.”
Historic undersupply still lingers
BNZ chief economist Mike Jones (pictured lower left) cautioned that while conditions are improving, New Zealand has underbuilt for years, contributing to surging prices—especially during the pandemic.
“The resulting shortfall of houses has, at times, [contributed] to outsized gains in NZ house prices and rents,” Jones said. “None more so than during the COVID period where a pre-existing housing shortage created tinder box conditions for house prices once a bit of demand stimulus started to flow through.
“Some of these dynamics have shifted more recently. The 2023 boom in population growth has well and truly deflated. And even though residential building activity has slowed down sharply, population growth looks set to track below that of the housing stock at least for this year.”
He said it was no surprise the housing and rental markets were shifting toward excess supply, with rents dropping in some areas and house prices largely stagnant despite significant declines in mortgage rates.
Data from Realestate.co.nz showed total property listings reached a decade high of 36,870 in March, up 10.9% year-on-year. Trade Me Property’s latest rental index, meanwhile, reported a 13% national increase in rental listings from December to January, alongside a significant 40% year-on-year surge.
New Zealand missing the economic upside
Elham Bahmanteymouri (pictured lower right), a senior lecturer in urban planning at the University of Auckland, said New Zealand has missed opportunities to convert population growth into productivity gains, RNZ reported.
“Population growth stimulates productivity, it brings a healthy type of inflation to our economy if we manage it well,” Elham Bahmanteymouri said. “But unfortunately, in these past years, especially post 2018, we really didn’t use the opportunities. Housing and infrastructure planning has not kept pace.”
She said a broader, more integrated approach is needed to address supply constraints, particularly in housing, transportation, and public infrastructure.
“We need a more innovative approach to the problem… we need long-term plans,” Bahmanteymouri said.
What’s next for the housing market?
The combination of slowing migration, stabilised rents, and sufficient housing stock may mark a turning point for New Zealand’s property market.
Yet, the uneven pace of infrastructure investment and long-term planning gaps remain hurdles, especially in high-growth urban areas.
While experts broadly agree that acute housing shortages have eased, the question now is whether policy, planning, and investment can keep pace with future demand—without repeating the shortfalls of the past decade.
