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New research shows increased population pushes up house prices but share of migrants does not

There has been widespread concern that strong increases in immigration flows have caused a housing crisis in New Zealand.

"We know that between 1986 and 2013, the number of foreign-born New Zealand residents more than doubled, whereas the New Zealand-born population rose by only 8 percent. Over the same period, the average real (inflation adjusted) house price increased by about 140 percent,” said Dr Trinh Le, a Research Fellow at Motu Economic and Public Policy Research.

“What we didn’t know was the impact that different migrants were having on the housing market.”

After controlling for socio-demographic differences, the researchers found that moving New Zealanders put more pressure on house prices than the same number of immigrants would.  The researchers found that rents do not respond much to population growth, although they were positively related to higher shares of recent movers, whether from inside or outside New Zealand.

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Tags: immigration