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Understanding New Zealand’s decline in homeownership

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  • Steven C. Bourassa
  • Song Shi

Abstract

Homeownership is an important component of the New Zealand lifestyle. In recent decades, however, the ownership rate has been declining and the reasons are poorly understood. This paper explains the decline using a decomposition technique that has been applied in other contexts. We find that borrowing constraints and ethnicity have been particularly important contributors to the decline. Rapidly rising house prices clearly have played a major role in the inability of income to keep up with prices and the increased impact of borrowing constraints. We also show that the increased down payment requirements imposed by the Reserve Bank of New Zealand in 2013 are unlikely to have affected the ownership rate.

Suggested Citation

  • Steven C. Bourassa & Song Shi, 2017. "Understanding New Zealand’s decline in homeownership," Housing Studies, Taylor & Francis Journals, vol. 32(5), pages 693-710, July.
    • Handle: RePEc:taf:chosxx:v:32:y:2017:i:5:p:693-710
    DOI: 10.1080/02673037.2016.1228851
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    References listed on IDEAS

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    1. David Hargreaves, 2008. "The tax system and housing demand in New Zealand," Reserve Bank of New Zealand Discussion Paper Series DP2008/06, Reserve Bank of New Zealand.
    2. Mark Smith, 2010. "Evaluating household expenditures and their relationship with house prices at the microeconomic level," Reserve Bank of New Zealand Discussion Paper Series DP2010/01, Reserve Bank of New Zealand.
    3. David Law & Lisa Meehan, 2013. "Housing Affordability in New Zealand: Evidence from Household Surveys," Treasury Working Paper Series 13/14, New Zealand Treasury.
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    Cited by:

    1. Michael Warlters, 2023. "Stamp Duty Reform and Home Ownership," The Economic Record, The Economic Society of Australia, vol. 99(327), pages 492-511, December.
    2. Kees Dol & Harry Van der Heijden, 2018. "The dynamisation and subsequent vulnerability of the Dutch owner-occupied sector. An analysis of 1986-2012," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 500-501-5, pages 139-156.

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