The prime minister is wrong to just blame returning Kiwis for rising house prices, according to a research note by the New Zealand Initiative.

During an interview with Mike Hosking last week, prime minister Jacinda Ardern said New Zealanders coming home after Covid-19 was a major factor in record levels of home lending.

However, it is not correct to draw a straight line from high house prices to net migration, according to the report Misdirection on housing affordability unhelpful.

Statistics New Zealand today released new data showing net migration has trended at historic lows since Covid-19 restrictions began in late March.

Report author David Law says the housing affordability problem is complex, but a lot is known about the key drivers – and net migration is likely not one of these, at the moment.

“Supply constraints are an important factor, but people coming home to New Zealand is an overstated problem at the moment,” he says.

Fresh data shows in the five months from April to August, net migration was only 1700. That is 13-times lower than in the same five months a year prior.

“On the other hand, Covid-19 restrictions have reduced housing supply as well, particularly because new houses could not be built under Level 3 and Level 4.

“More houses will play a bigger part in solving the housing crisis, which the Government has promised but so far not delivered.

“A far more likely cause of today’s house prices than net migration is the Reserve Bank’s decision to drop the OCR to its lowest level this year coupled with a $100 billion programme of quantitative easing,” Law says.

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Misdirection on housing affordability unhelpful is available here.

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