A New Zealand Regional Housing Model

Arthur Grimes, Sean Hyland (), Andrew Coleman (), James Kerr () and Alex Collier ()
Additional contact information
Sean Hyland: Motu Economic and Public Policy Research
Andrew Coleman: New Zealand Treasury
James Kerr: Ministry of Business, Innovation and Employment
Alex Collier: Ministry of Business, Innovation and Employment

No 13_02, Working Papers from Motu Economic and Public Policy Research

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 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.

Keywords: house prices; housing supply; lot prices; rents; housing model (search for similar items in EconPapers)
JEL-codes: R21 R31 (search for similar items in EconPapers)
Pages: 84 pages
Date: 2013-02
New Economics Papers: this item is included in nep-agr, nep-cmp and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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