The impact of demand-side housing subsidies on the housing market

This report was produced by AHURI for the Ministry of Social Development. It seeks to identify the extent that housing allowances are ‘captured’ by landlords through rising rents versus improving the material living standards of subsidy recipients. It looks at the evidence from four countries (New Zealand, France, Finland and the UK).

The researchers state (p40; 2015) that the two New Zealand specific studies present contradictory findings. Stroombergen (2004) finds no effect of the Accommodation Supplement (AS) on private rental prices, while Grimes and Hyland (2013) detect that there is an effect, estimated to be around 35 per cent. The researchers provide a caution on the use of the findings from the New Zealand specific studies due to the data and modelling used. The researchers conclude that it is clear from the evidence that an increase or decrease in housing supplement is a factor in increased or decreased rental prices. Read here.