alan bollard : the new zealand housing market extract from an address by dr alan bollard, governor of the reserve bank of new zealand, to the property council of new zealand, 9 september 2003. * * * i ’ d like now to consider in more detail the new zealand housing market, it being one of the factors behind our strong domestic economy, at a time when many exporters have seen their incomes retreat in recent months. new zealand ’ s housing sector has experienced a strong cyclical upswing over the past 18 months. it ’ s not just auckland. sales growth and rising house prices are prevalent in many parts of new zealand. building consents are at cyclically high levels. that ’ s both including and excluding apartments. residential investment is expanding the nation ’ s housing stock rapidly, yet demand continues to outstrip supply. we see this in rising prices and a shortage of properties listed for sale. the median time it takes to sell a house currently sits at an unprecedented low of just 26 days. as a consequence, recently house prices have been rising rapidly. what ’ s driving this? the answer is demand exceeds supply. demographics are part of the story. new zealand has had rapid population growth in recent years, driven by net immigration. this includes not just people coming here but people here choosing not to leave. the longstanding drift of new zealanders north and into town is also a factor. in addition, social changes are seeing the average number of persons per home reduce. life - style changes are increasing demand for new kinds of accommodation, such as inner - city apartments and coastal and lakeside properties. some of these factors have been at work for a long time. even in the late 1990s, when population growth was relatively weak, there was substantial construction activity. however, more recently population growth has been marked. the natural increase in population currently is slower than a decade ago, but recent immigration has been very strong. in terms of permanent and long - term migration we had a net outflow of 10, 000 persons per year in early 2001 and a net inflow of more than 40, 000 per year in mid - 2003. that too undersells the story. in addition we have short - term stays, such as students and those on work permits, and those who apply for residency once they are here. total migration has been running at more than 60, 000 persons per annum over the past two years. this is well in excess of the mid - 1990s.

alan bollard : the implications of the canterbury earthquakes for the reserve bank opinion piece by dr alan bollard, governor of the reserve bank of new zealand, at the implications of the canterbury earthquakes for the reserve bank, 13 may 2011. * * * as canterbury ’ s recovery from its devastating earthquakes progresses, it is timely to assess the economic damage in canterbury and beyond, and consider what the reserve bank – and monetary policy – should do. prior to the february earthquake, new zealand ’ s economic activity had been weaker than expected through 2010. households were already spending less, focusing on reducing debt, and this had slowed business investment. by late 2010, however, signs of recovery had begun to emerge, notably among exporting firms benefiting from improved overseas demand and commodity prices. the february earthquake disrupted this recovery. it resulted in significant loss and trauma, compounding the effects of the september 2010 earthquake and subsequent aftershocks. in addition to the considerable impact on peoples ’ lives, there has been substantial damage to assets, as well as disruption to economic activity. the total cost of damage has been estimated at $ 15 billion – approximately 8 percent of annual nominal gross domestic product. that is a very large proportion of our economic activity, in relative terms twice as big as the impact of the recent japanese earthquake. these estimates are very uncertain and could move around a lot. the vast bulk of the losses to residential and commercial property will be covered by insurance – via the earthquake commission ( eqc ) for residential property, and private insurance for both residential and commercial property. unlike some other countries like japan, there is a high level of reinsurance in new zealand, meaning the majority of privately insured losses will be borne by global insurance companies rather than domestic insurance firms. the government will bear the majority of the remaining losses, with an estimated $ 3 billion in damage to uninsured public infrastructure and government buildings, as well as the costs being met from the eqc reserves. fiscal costs will also include the array of additional government support programmes – support to small businesses, clean up and recovery costs, and acc payments. these costs are material and will place pressure on the crown accounts at a time of fiscal consolidation. we see three distinct phases in economic activity following the earthquakes : disruption, stabilisation and reconstruction. economic disruption is most pronounced in canterbury, but flowing through to other regions. consumer spending, tourism and residential investment can be expected to have deteriorated. most businesses with operations in the