House Prices during the COVID-19 Pandemic: The Impact of "Panic" Returnees Migrants to New Zealand

House Prices during the COVID-19 Pandemic: The Impact of "Panic" Returnees Migrants to New Zealand

The COVID-19 pandemic prompted a significant number of "panic" returnees to return to their home countries as a "safe haven". This influx of returnees brought associated problems related to rising house prices and affordability. To explore this issue, our empirical study applied an auto-regressive distributed lag (ARDL) approach with error-correction framework and ARDL approach with instrumental variable (IV) framework to analyse the impact of returnees on New Zealand’s housing market. The findings reveal that returnees were the major driver of house prices increases, both in the short and long term. Specifically, a 1% increase in the number of returnees led to a 0.011% rise in house prices. This impact was driven not only by demand-driven population changes but also by other long-standing factors such as rental prices, mortgage rates, and supply constraints on new housing developments. Importantly, the effect of returnees becomes more pronounced and provided a longer-term pressure on New Zealand’s housing market. Policy recommendations and housing programmes needed to address these issues are also discussed.