Questions are being raised about how big our housing shortage really is following the Census 2018 release

Wednesday, 9 October 2019

Questions are being raised about how big the housing shortage really is following the release of the 2018 Census.

Census 2018 data is raising questions about how many houses are needed in New Zealand - and possibly less than expected.

Colliers International has published a report saying population growth in the five years from Census 2013 to Census 2018 was quite a bit lower than forecast in Statistics New Zealand's June 2018 provisional population estimates.

Colliers said that might mean New Zealand needed 69,000 fewer homes than expected.

A Colliers International report raises questions about whether Auckland's housing shortage is as bad as previously thought.

Between Census 2013 and Census 2018 the number of people living in New Zealand rose from 4.24 million people in 2013 to 4.7 million in 2018, an increase of 457,500 people.

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That is 186,000 fewer people than the 643,500 forecast by Stats NZ in its June 2018 estimates.

The 643,500 increase indicated an additional 238,000 homes were needed (at an average household size of 2.7 people).

But the lower increase of 457,500 meant the number fell to 169,000 additional dwellings and that was 69,000 fewer, Colliers said.

Colliers used residential building consent numbers to measure how well or not the building industry responded to the shortage.

Between 2013 and 2018, 120,000 dwelling consents were issued. That is 49,000 less than the 169,000 the Census 2018 data indicated were needed.

So there was still a shortage of houses nationwide, Colliers said, but not as large as the Stats NZ 2018 estimates indicated.

Auckland's need for houses might not be as large as thought also.

The 2018 Census showed population growth in the super city of 156,000 people and not the 280,000 forecast in the Stats NZ June 2018 forecasts.

At an average household size of 2.9 people in Auckland the number of homes needed by an extra 156,000 people was 54,000, much less than the 97,000 homes if the population had grown by 280,000.

And with residential building consents in Auckland totalling 41,000 in the five years 2013-2018, the shortage was 13,000, rather than potentially 56,000 using the Stats NZ June 2018 forecasts.

Economist Cameron Bagrie says estimates of housing shortages over 100,000 were 'pie in the sky'.

Population growth was slower also in other regions Census 2018 showed than what was predicted by Stats NZ in June 2018. In Wellington growth was lower by about 14,600 people while in Canterbury it was 24,000 lower, Colliers said.

Buyers and developers should be cautious when they did their due diligence. They needed to understand the dynamic of the market and not rely on broad data sets without access to specific data, Colliers said.

'It makes sense to question,' Infometrics chief forecaster Gareth Kiernan said.

Infometrics' estimates of housing under supply were in a state of flux because there were several population estimates that were not consistent and estimates of dwelling stock which did not line up with quarterly stats from Stats NZ as well.

He was waiting for Stats NZ's estimated resident population coming out in March 2020.

The population numbers released so far had not been adjusted for any under-counting in the Census, ignoring the 2018 Census issues which had 'blown everything out of the water anyway'.

Maybe Auckland's shortage was not as critical as thought but he still considered there was a shortage there.

The problem was a lack of faith in the Stats NZ numbers at present given the Census 'debacle' and changes in methodology around immigration which had made life difficult in estimating the population.

Independent economics forecaster Cameron Bagrie of Bagrie Economics said an understanding of the statistics around the housing market were of critical importance and the country should not be 'penny-pinching' on producing it.

The problems with the Census were seriously understated. If the value of the data was limited that could have economic implications down the track.

His general view of the housing market was that there was a shortage but some numbers that were thrown around like 100,000 houses short were 'absolutely pie in the sky'.

Auckland usually attracted about half the migrants and grew at a higher rate than the national average but it did not between 2013 and 2018.

'Auckland's population grew in line with the national average which tells me there's an awful lot of people who moved out of Auckland between 2013 and 2018.'

That had created housing demands in the regions and reduced the extreme demand in Auckland. A massive surge of Aucklanders into the regions had resulted in soaring rents and housing pressures there.

In July Kiwibank economists said New Zealand was short of 130,000 homes.

Kiwibank senior economist Jeremy Couchman said there were a wide range of estimates around the size of the housing shortage and Kiwibank was probably at the top end. It was not easy to figure out but everyone gave it their best shot.

They would have another look at their forecasts on housing shortages but it was hard to quantify demand because there had been such a sharp increase in population through migration and a rise in the number of people per dwelling, against the declining trend seen previously.

People were being crammed into existing housing stock.

That raised a key question of how much of that was need rather than choice and how did that affect the estimate of how many more dwellings were needed.

The good news was the high level of residential building consents and if that was sustained the number of people per home would decline.