Immigration is smashing renters

By The Sydney Morning Herald

This article focuses on the impact of international students on the rental market in Australia - I don't have a particular view on their solution, but it did make me reflect on the impact on the NZ rental market of general immigration now that settings have been loosened again. As we reflect on the last few years it's interesting to note that Covid's closed borders meant that NZ tested so-called "law" of supply and demand in the housing market. We held demand steady (i.e. no significant inward migration) and through a building boom with unprecedented levels of new building consents issued by councils, increased supply significantly. So affordability improved?? No -across NZ we saw unaffordability rise to new heights. Looks like the "law" was more of an economic hypothesis, perhaps holding true in the longer term but woefully inadequate in a meaningful timeframe.And now we add immigration - a genuine boost on the demand side. Stats NZ have reported that the net migration gain in the August 2023 year is 110,200 and added to that, many skilled migrants are prevented from purchasing a house for the first year (other than going through an Overseas Investment Office process) under their VISA conditions effectively forcing them in to the rental market. A lot of renters to add to an already stressed rental market at record levels of unaffordability.The new government has a range of new policies designed to address these issues -through that, the rental side of the housing market will need to remain in sharp focus. Infrastructure -particularly 3 Waters- remains key to enabling new supply (Build-to-rent included) and must also be at the forefront of policies for both central and local government. - Aksel Bech