Abstract:
This study examines the impacts of external immigrant inflows on both aggregated and disaggregated markets in New Zealand. To estimate the overall influence, the hedonic model formulated by Rosen (1974) was employed based on the national transaction records from 1996 to 2013. The empirical results demonstrated a positive relationship between long-term arrivals and house price appreciations, which is consistent with the existing literature. On disaggregated submarkets, unlike previous studies, this thesis investigated how selected area units responded to a specific external regulation change. The difference-in-difference (DID) technique developed from basic hedonic modelling was adopted, which enabled the capture of both overall and marginal changes, and allowed a comparison of two outcomes occurring before and after the intervention. The Chinese ethnic group was chosen as a research subject because of the sector’s unique behaviour and outstanding performance in the local housing market. The DID estimation documented marginal changes in selected Chinese area units as a response to the sudden alterations to immigration policy in 2002. The empirical results showed that the new regulation had limited impact on Chinese-dominant area units where the local house price temporarily dropped within a lagged term. In the higher-end market, which was likely the target segment of wealthy Chinese immigrants, house prices showed an immediate decline after the announcement. However, this effect diminished after 18 months. The findings of this study suggest that constraining residential house prices solely by immigration control can only achieve limited results for certain market segmentations and in certain geographic areas. To achieve long-term sustainable results, other forms of market controls should be considered by the regulators.