[tmnvix]

We had an 'undersupply' problem in NZ until very recently. It seemed like it was all the media ever talked about. Then inflation hit, rates went up, and property prices started declining rapidly (current rate of decline looks like NZD5000/w on a median priced home over the past few months). Suddenly, the number of properties on the market is up 2-3x in the major cities and available rentals have doubled in places. Rents are falling even as commentators claim landlords will try to pass on their increased holding costs to their tenants.

Where have those properties all come from?

Consider that all properties are either investments or owner-occupied. By definition owner-occupiers don't keep empty (or underutilised properties - assuming second homes and holiday homes can be categorised as investments). Therefore, if there are more investors active (or more correctly, investment properties) in the market, the proportion of empty or underutilised homes is going to be higher. Investment activity in the market has undoubtedly been increasing for some time.

What appears to be happening is that our underutilised housing stock is now being revealed as investors panic. The same thing happened in Ireland during the GFC.

There are many reasons investors will leave properties empty or underutilised during a speculative boom (renovating to flip, on the market, good old fashioned landbanking, a convenient city pad or holiday home, etc). There is much more of this about than people realise.

I am very confident that rising interest rates are going to turn out to be a good thing for renters and first time buyers. It'll just take a bit of time and some economic upheaval.

[jseban]

There's a lot of flexibility in how much living space a person is using also, it's an order of magnitude difference depending on how much money they have.

People used to live a whole family in a one room apartment, and now we have single divorced boomers living in whole houses alone. I think people adjust a lot here depending on the economy

[tmnvix]

That's a good point.

It's interesting that for the past 15 years or so the average household size in NZ has remained at about 2.7 despite a housing crisis with more people living in cars, converted garages, etc. I always assumed that the more crowded households were 'balanced out' by an increase in the number of smaller dwellings with fewer people (specifically apartments) but it could also be an increase in the number of people living just 1-2 in larger dwellings.

[yakak]

Very true. California is an interesting one though with their occupancy rules. Very low density could reduce in a crunch but people who would go to the highest density are prevented from doing so by the landlord owned legal system.

[irrational]

My boss (not divorced or a boomer, but definitely single) lives alone in a 5,000 foot gorgeous home up in the hills. It’s crazy.

[dan-robertson]

An alternative explanation would be reduced demand. If interest rates have been around 3% for a while and you’re now looking at 8–10% (and there’s some expectation that house prices will fall) then maybe getting a mortgage to buy a house isn’t such an attractive proposition. Lower demand over a reasonable amount of time should lead to more properties being on the market.