Guest Post – Population and Housing

Auckland-Houses--NZ-Herald

Every day someone spouts out verbal brouhaha about the property market not meeting the needs of population growth.

This is a myth. Here is an example of why.

In the month of March long term immigration numbers topped 7,000 for the first time in 10 years according to the Dept of Statistics.

7243 people arrived in our country.

But 7238 people departed the country.

That means the entire country had a net population increase of just 5 people.

Yes you read that right – five (5) people.

So that’s one month and there are eleven other months in a year. Plus we have natural births.

Well lets debunk the birth rate issue up front.

Babies and children don’t buy houses.

Its not until around 2030-2033 that the effects of people born in 2013 will be felt on the property market in terms of demand for houses as those wee kiddies today grow up and leave home. 

What matters today is the birthdate in the 1993-1996 period. In 1993 a total of 58,866 births were registered.

So where are those 1990’s kids now?

The answer – burning couches and spewing up at University and living in rented accommodation like University campus dorms. We see this rate in such statistics as the annual increase in under graduate students at University. Auckland University alone has nearly 1,000 additional students each year.

Students pile into flats so its not likely to create pressure – just yet!

So 58,866 people would potentially mean some 20,298 houses need to be built this year.

But if that pressure actually existed where are all the homeless people, those crammed into houses, those commuting from far off places? Where are the excess of buyers at open homes that would make the news?

As to immigration the year to June 2012 saw approximately 40,000 immigrants add to our population which is a figure similar to 2010-2011.

But there were 43,400 migrations out of the country meaning population decreased overall in the 2012 year.

27% of immigrants in 2012 were Indians and Chinese who bring children and typically populate single dwellings at a higher person density rate to New Zealand born citizens.

Even if all immigrants to New Zealand populated houses at the average 2.9 persons per house (its typically higher) a 40,000 person increase in pop through migration only equates to 13,000 new homes.

But New Zealanders are leaving the country in droves. As noted previously the 2012 year saw more people migrate out of the country.

Consistently migration numbers have been only slightly lower than immigration. In the early 1990’s we saw between 40,000-60,000 people a year leaving reflecting a net loss after inflow of 10-18,000 per annum. That changed in the late 1990’s and stayed that way till 2001 when expats flooded back in. Since then a marginal increase in population has been recorded each year. But its no silver lining of migrants and they are settling in more places than just Auckland.

But here is the telling story and back to births.

For a population to stay neutral it must produce 2 children per family on average. For it to increase it must be at least 2.1 children which produces a marginal increase over time.

Like most developed nations New Zealand families have become smaller and since the late 70’s the birth rate has dropped below 2 children per family meaning the natural population is not gaining but falling. It currently sits at 2.04 births per female. In essence we are as a nation going backwards in terms of population increase if considered in terms of fertility/birth rates.

The department of statistics says that deaths are on the rise and in 2012 approximately 29,000 people died.

So if we consider all of these facts loosely and then focus on 2012 we can get a picture of things.

Long term the population from births is flat or falling. The death rates are increasing.

2012

Migration in 2012 against immigration produced a net loss of 3,400 people.

There were 60,000 births in 2012 reflecting a decline on previous years.

There were just under 30,000 deaths.

Purely on numbers the net population increase for New Zealand was 26,600 approximately.

We can deduce that immigration is not increasing population because we had more people leave than arrive.

Getting to point. The so called housing crisis in Auckland is purported to be 13,000 houses needed each year according to bendy Len Brown and a shortfall of 80,000 homes if we take the former ARC’s word for it.

But if we look at the 2012 year as a snap shot that cannot be true.

All immigrants can be safely assumed to have moved into houses vacated by people leaving the country with some spare because we lost more people than gained.

So we are talking about natural birth rates. Well over the last 3 decades birth rates have been between 1.9 and 2.1 per woman. Overall stagnant meaning deaths should have been equal over those years to births.

Old people don’t occupy houses till death – the majority are stuffed into rest homes to rot by the telly and piss their pants. They create space for younger people to occupy.

What this suggests is that the natural population increase is not really producing much demand on housing – there is sufficient housing stock being freed up by older folk who move to the ‘Sunny Vale Retirement Home’ and younger people are filling it in and renovating.

The immigrants are filling up the houses vacated by those moving overseas.

And a marginal increase is creating just enough demand for houses for permanent residents.

New born children don’t buy houses for another 20 years so they don’t create demand.

We don’t need 13,000 houses a year if 2012 is anything to go by. The 26,000 population increase was births. So that number can be deducted from the total.

What Auckland and New Zealand needed to produce in terms of new housing stock was pretty much nothing. Yes nothing at all.

So who is buying our property and is there really a population increase?

The Dept of Statistics said that 68,800 international students were approved to study here. That’s a very big increasing market it is a massive number of people compared to migration or births. It is more than 2.6 times larger.

Our biggest population increase is in temporary residents.

Overall the point of this blog is to raise a thought about whether there really is a dire shortage of property in Auckland. Whilst I am loose with the numbers they do sufficiently demonstrate that there is a big question mark around Len Brown’s purported shortfall in houses.

We don’t have the population increase in the demographic we need that would drive demand for new houses. That hasn’t arrived yet. Generally speaking not much population increases are occurring in the bracket that counts. Its crying babies and tantrum toddlers not house buyers and renters.

And that demand is spread over the nation. Auckland’s slice of the pie is only part of that – perhaps a third which could possibly equate to around 8,700 people and 2600 houses.

That isn’t 13,000 houses.

All of these statements are consistent when one considers house building.

2012 the highest number of consents were issued since 2008 and averaged roughly 1,500 a month nation wide for 18,000 in the year. But we don’t know if that also included hotel rooms, apartments, holiday homes or other dwellings that may not suit long term dwellers.

Auckland’s share of that is again only a portion of that total.

It is the Property Merovingian’s opinion that demand is flat, its not coming from migrants or births but from students and temporary residents and conflated by consents for other dwelling types.

So Len – where is the demand?

This post was written by the Property Merovingian


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet. Cam Slater doesn’t do quiet and, as a result, he is a polarising, controversial but highly effective journalist who takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him, you can’t ignore him.

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