A New Zealand Regional Housing Model
AbstractThe New Zealand Regional Housing Model (NZRHM) includes estimated equations for four key housing market variables: house prices, housing supply (new dwelling consents), residential vacant land (lot) prices, and average rents. Long run (cointegration) relationships and short run (error correction) relationships are estimated for each of these variables across 72 TLAs within New Zealand. The model is designed so that it can be used for short to medium term forecasting. It is also useful for simulating the effects of shocks to the housing market. The paper presents simulations of the impacts of shocks to exogenous variables (population, credit restrictions, construction costs and farm prices) as well as shocks to policy variables (developer contributions, accommodation supplement, and land availability). We also simulate the consequences of the Christchurch earthquakes for Canterbury housing outcomes. The over-arching conclusion across all simulations is that housing markets are very slow to adjust to disequilibria, such that exogenous shocks have very long lasting effects on prices and the housing stock.
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Bibliographic InfoPaper provided by Motu Economic and Public Policy Research in its series Working Papers with number 13_02.
Length: 84 pages
Date of creation: Feb 2013
Date of revision:
house prices; housing supply; lot prices; rents; housing model;
Find related papers by JEL classification:
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-03-02 (Agricultural Economics)
- NEP-ALL-2013-03-02 (All new papers)
- NEP-CMP-2013-03-02 (Computational Economics)
- NEP-URE-2013-03-02 (Urban & Real Estate Economics)
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