Housing Affordability: Lessons from the United States (WP 14/11)

Abstract

Over the last two decades, New Zealand experienced a threefold increase in housing prices. The largest surge in prices in recent years occurred between 1998 and 2007, a period of housing price growth in many developed economies. Since 2007, housing price growth remained flat until 2011, and then prices once again embarked on an upward trend. However, recent housing price growth has been concentrated in Auckland and Christchurch. The purpose of this report is to compare and contrast New Zealand housing trends and policies with those of United States. The report summarizes lessons learned from the United States and highlights data needs and research questions that may require further consideration in order to better understand housing markets in New Zealand.

Acknowledgements

I would like to thank the New Zealand Treasury and Norman Gemmell for financial support. I also thank the entire housing team at Treasury, as well other members of Treasury (Andrew Coleman and Grant Scobie), Richard Hills from the Department of Internal Affairs, members of the Reserve Bank of New Zealand (Chris McDonald, Miles Parker, Roger Perry, and Elizabeth Watson), members of the Auckland Council (Ree Anderson, David Clelland, and Alan McGregor), members of the Auckland Policy Office (Leslie Baddon, Hamish Bunn, David Hermans, Sam Price, and Todd Webb), and Todd Property representative Neil Donnelly for useful discussions and meetings that enabled me more effectively make comparisons between the New Zealand and United States housing experiences.

Disclaimer

The views, opinions, findings, and conclusions or recommendations expressed in this Working Paper are strictly those of the author(s). They do not necessarily reflect the views of the New Zealand Treasury or the New Zealand Government. The New Zealand Treasury and the New Zealand Government take no responsibility for any errors or omissions in, or for the correctness of, the information contained in these working papers. The paper is presented not as policy, but with a view to inform and stimulate wider debate.