Was I wrong about there being no housing shortage?

Recently I wrote about why the much-hyped ‘housing shortage’ is a myth and why the idea that we have a shortage of around 100,000 homes can be dismissed based on a simple analysis of population and household occupancy data.

My story noted that the number of people living in an average Kiwi dwelling actually dropped between 1986 and 2013. This could only happen if the national population had also dropped, or if we had built more houses than we needed.

Since the population didn’t drop the opposite must be true, and by dividing the population by the average occupancy, we know we built 565,000 new dwellings between 1986 and 2013 — around 200,000 more than we would have needed just to stand still.

Responses to my article fell broadly into two camps. There were those, many from the construction and statistics industries, who confirmed my findings. Others claimed my numbers were wrong because they didn’t take account of other factors, including ‘ghost homes’, foreign buyers, and state housing numbers (to name a few).

In fact, the Census measures all of these things, and the average occupancy number it produces is a definitive count of all homes, whether they’re empty or inhabited and regardless of who owns them.

But one response is worthy of further analysis. It appeared in the newsletter of a well-known economist, someone whose views I greatly respect.

He challenged my figures, saying the national numbers I used skewed the result, and that a more accurate picture can be arrived at by just looking at Auckland, the subject of most of the ‘‘shortage’’ claims.

The numbers he cited show that the average household occupancy number for Auckland has actually been increasing over the past 20 years, from an average in 2001 of 2.94 people per Auckland household, to 2.98 in 2006, 3.00 in 2013 and 3.15 in 2018.

It was a reasonable point, although I don’t accept his 2018 numbers for the same reason that I rejected them in my original article — the 2018 Census was a mess and Statistics NZ have admitted its results shouldn’t be relied on.

But the rest of his figures bear closer scrutiny. In 2001, there were 1.075 million people in Auckland and an average of 2.94 people per household, according to Census records.

If we divide the population by the average occupancy, there were 365,646 dwellings in Auckland in 2001. In the 2006 Census, the Auckland population had increased to 1.208 million and the occupancy figure to 2.98 people per household, on average.

This means that dwelling numbers had increased to 405,369 — an increase of 39,723 homes but 5500 homes short of the number we would have needed to build to stay at the 2001 occupancy figure.

By 2013 there were 1.309 million people in Auckland, at an average of 3.00 people per household. This means that dwellings had increased to 436,333 — up 30,964 homes since 2006 but 8905 short of the number required to stay at the 2001 occupancy figure.

It comes down to this: there were 70,687 dwellings built in Auckland in the 12 years between 2001 and 2013 — 14,405 short of the number required to keep the 2013 occupancy at 2001 levels.

So was I wrong about there being no housing shortage? Yes, and no. Nationally, my figures were correct — there is no overall housing shortage in New Zealand.

But there has been a modest shortfall in Auckland since 2001 — although it falls far short of the 100,000 which has been in vogue. As always, the numbers tell the real story.

- Ashley Church is the former CEO of the Property Institute of New Zealand and is now a property commentator for OneRoof.co.nz. Email him at [email protected]