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A New Zealand Regional Housing Model

Author

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  • Grimes, Arthur
  • Hyland Sean

Abstract

The 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 overarching 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.

Suggested Citation

  • Grimes, Arthur & Hyland Sean, 2013. "A New Zealand Regional Housing Model," Motu Working Papers 291392, Motu Economic and Public Policy Research.
    • Handle: RePEc:ags:motuwp:291392
    DOI: 10.22004/ag.econ.291392
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    Cited by:

    1. is not listed on IDEAS
    2. Grimes, Arthur & Hyland, Shane, 2013. "Housing Market Dynamics and the GFC: The Complex Dynamics of a Credit Shock," Motu Working Papers 291377, Motu Economic and Public Policy Research.
    3. Funke, Michael & Kirkby, Robert & Mihaylovski, Petar, 2018. "House prices and macroprudential policy in an estimated DSGE model of New Zealand," Journal of Macroeconomics, Elsevier, vol. 56(C), pages 152-171.
    4. Mark Skidmore, 2014. "Housing Affordability: Lessons from the United States," Treasury Working Paper Series 14/11, New Zealand Treasury.
    5. David C. Maré & Jacques Poot, 2019. "Valuing cultural diversity of cities," Motu Working Papers 19_05, Motu Economic and Public Policy Research.
    6. Dean Hyslop & David C. Maré, 2022. "The impact of the 2018 Families Package Accommodation Supplement area changes on housing outcomes," Motu Working Papers 22_01, Motu Economic and Public Policy Research.
    7. Hyslop, Dean R. & Rea, David, 2019. "Do housing allowances increase rents? Evidence from a discrete policy change," Journal of Housing Economics, Elsevier, vol. 46(C).
    8. Grimes, Arthur & Hyland, Sean, 2013. "Passing the Buck: Impacts of Commodity Price Shocks on Local Outcomes," Motu Working Papers 189522, Motu Economic and Public Policy Research.

    More about this item

    Keywords

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    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

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