Template-Type: ReDIF-Paper 1.0
Author-Name: Arthur Grimes
Author-X-Name-First: Arthur	
Author-X-Name-Last: Grimes
Author-Email: Arthur.grimes@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Sean Hyland
Author-X-Name-First: Sean	
Author-X-Name-Last: Hyland
Author-Email: sean.hyland@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Andrew Coleman
Author-X-Name-First: Andrew
Author-X-Name-Last: Coleman
Author-Email: Andrew.coleman@treasury.govt.nz
Author-Workplace-Name: New Zealand Treasury
Author-Name: James Kerr
Author-X-Name-First: James
Author-X-Name-Last: Kerr
Author-Email: james.kerr@mbie.govt.nz
Author-Workplace-Name: Ministry of Business, Innovation and Employment
Author-Name: Alex Collier
Author-X-Name-First: Alex
Author-X-Name-Last: Collier
Author-Email: alex.collier@mbie.govt.nz
Author-Workplace-Name: Ministry of Business, Innovation and Employment
Title: A New Zealand Regional Housing Model
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.
Length: 84 pages
Creation-Date:  2013-02
File-URL: https://motu-www.motu.org.nz/wpapers/13_02.pdf
Number: 13_02
Classification-JEL: R21; R31
Keywords: house prices, housing supply, lot prices, rents, housing model
Handle: RePEc:mtu:wpaper:13_02