The rise and rise of private renting: Insights from supply and demand system modelling in Britain and New Zealand

Most academic attention seems to focus on owner occupation or social renting, but the big story of the last decade or more in many countries has been the resurgence of private rented housing. Both UK and New Zealand have seen large and sustained rises in the relative and absolute size of the sector, with relatively low increases in rents. After briefly reviewing the institutional and broader economic context for this phenomenon, including evidence on the profile of private landlords, the paper will suggest an appropriate framework for modelling the sector. This adapts the classic demand and supply model to yield a system entailing a rent and supply stock or flow function, possibly embedded in a wider housing market system addressing house prices and supply, at a sub-regional scale. Implementations of such models for New Zealand and parts of the UK (England, N Ireland) are compared and assessed, and implications for current views of investor and consumer behaviour are drawn out. Simulation models for wider housing systems in these countries are used to look at a range of potential future scenarios, leading to the conclusion that the rise of private renting is very likely to continue.