Is There An Oversupply Of Newbuild Properties in New Zealand?
- Ryan Smith
- Jul 10
- 7 min read
Updated: Aug 5
Newbuild properties are popping up everywhere, but does that mean there's an oversupply? Let’s look at the facts before jumping to conclusions.
Are there too many townhouses being built? Is there an oversupply? If not, is one coming?
These are all questions we get regularly from investors who are looking at the market and wondering what the impact of new newbuild properties will have on their portfolio.
It’s a valid concern, and one that all investors should understand before or during their due diligence period.
So, what is an oversupply?
In its simplest form, an oversupply of newbuild properties means more properties available than buyers willing to buy, and that kills prices and investor returns.
There is a big difference, however, between supply growth and an oversupply. Just because the supply of properties coming to market is escalating, this isn’t necessarily an indicator of an imminent oversupply, because there might also be rapid population growth.
For example, between 2013 and 2018, Auckland’s population surged by 156,000 (from 1.416 million to 1.572 million), while annual dwelling consents climbed to nearly 35,000 by 2019, a record-breaking year. In that environment, rising supply was matched by demand so effectively that market tightness persisted rather than loosened.
True oversupplies are very uncommon in New Zealand, and it's hard to pin down a time in history where this happened unequivocally. However, during the 2000s, Auckland’s CBD did experience a clear glut of inner-city apartments. Developers flooded the market with small, investor-targeted units, many under 40sqm and unsuitable for families, just before the GFC of 2007–2009.
A large number of these properties sat vacant, rental yields softened, and prices stagnated for nearly a decade.
While this wasn’t a textbook case of national oversupply, it reflected a critical mismatch between the type of housing being built and the actual demand profile of the area, i.e., the oversupply was product-specific as opposed to market-specific.
There were still buyers in the market, but there were too many small CBD apartments, and demand was low. The result was oversupply in practical terms, even if headline housing numbers didn’t suggest it.
Oversupplies are not national issues; they are specific to regions or areas of the country where supply has outpaced demand.
So if you are talking about an oversupply of properties, make sure you’re looking area-specific.
Key Indicators of an Oversupply
To determine whether a market is oversupplied, you should look for these key indicators:
Rising stock levels/days on market
Falling or stagnant prices
High pipeline of consented newbuilds versus population growth
Investor activity dropping
Rising Stock Levels/Days On Market
Higher property inventory, i.e., the number of listings relative to actual sales, can be an early signal of softening demand, and in some cases, a precursor to oversupply.
Add to this the days on market (DOM), how long it takes a property to sell once listed, and you’ve got two solid indicators of market heat.
The longer properties linger on the market, the weaker the buyer's urgency typically is. But here’s the catch: oversupply rarely plays out uniformly across the entire housing market; oversupply must be diagnosed at the segment and suburb level, not with a blunt national stat.
National figures can mask what’s happening in specific segments. For example, while REINZ data showed that the national median DOM rose from 35 days in May 2022 to 49 days by May 2024, much of that drag came from older standalone homes in less desirable areas.
Meanwhile, new-build townhouses in urban centres often continued to sell faster, with some developers reporting DOM under 30 days in high-demand suburbs of Auckland and Wellington.
So even when headlines scream “rising inventory,” it’s essential to zoom in. Townhouses are a distinct sub-market, often competing on different terms, with different buyers.
Falling Or Stagnant Prices
When property prices begin to stagnate, or worse, decline, it can signal that demand is no longer keeping up with supply.
While falling prices don’t always mean there’s an oversupply (they can also reflect interest rate hikes, lending restrictions, or broader economic uncertainty), sustained price drops in a specific housing type or location can point to an underlying mismatch between stock and buyer demand.
A good example is the Auckland CBD market, as mentioned previously, where rapid development outpaced owner-occupier and family demand. Prices for many small, investor-grade units flatlined for years, even as the wider market recovered after the GFC.
In the current market, CoreLogic’s data shows house prices nationally have begun to stabilise, but some areas and property types, particularly older or poorly located houses, are still experiencing price pressure, especially if they’re competing with more modern, code-compliant new builds.
The key is not just that prices are flat or falling, but which properties they’re falling for.
High Pipeline of Consented Newbuilds Versus Population Growth
Population growth often gets thrown around as a catch-all, but it’s not a failsafe for avoiding oversupply. What matters is how housing consents track relative to population growth:
Consents exceed population growth → risk of oversupply, downward price pressure
Consents align with growth → stable prices
Consents lag behind growth → tight market, upward price trajectory
Let’s look at where things stand right now in Auckland and Christchurch:
Auckland
The population increased by 84,800 people (5.4%) from 2018 to 2023, reaching 1,656,486
Yet, dwelling consents were around 21,000 per year in early 2022, but have since fallen to approximately 14,650 annual new dwelling consents by April 2024
Verdict: Consents have slowed, but still roughly match growth, suggesting equilibrium, not oversupply or acute shortage
Christchurch
The population grew by 49,400 people (15%) between 2013 and 2023, currently around 380,000
In contrast, only 2,560 dwelling consents were issued for the year ending December 2024, about 0.7% of the population, well below growth levels
Verdict: Consents lag far behind, meaning Christchurch is still in the tight-supply zone, not oversupply
Looking at these two scenarios, the statistics suggest Auckland is in a broadly balanced supply scenario, not tipping into oversupply, but not undersupplied either. Christchurch tells a different story: population jumped nearly 15% over a decade, yet the city consented to only about 2,560 new dwellings in 2024, far below demand. That’s a tight market, the exact opposite of oversupply.
Investor Activity Dropping
Investor activity isn’t just a statistic; it’s a powerful sentiment gauge.
When investors retreat, it typically means the math no longer stacks up. Conversely, when they return, it signals renewed confidence in rental returns and capital growth.
From 2022–2023, record-high interest rates (often above 7%) squeezed investor margins.
The result: activity slumped to lows not seen since 2021. For example, in September 2023, mortgaged multiple property owners, our proxy for core investors, made up just 22.6% of purchases, down from earlier highs.
Fast forward to early 2025, and optimism is creeping back; mortgaged investors accounted for 23–24% of all buyer activity in Q1, a recovery to levels last seen in late 2021. CoreLogic attributes this resurgence to two key factors:
Falling mortgage rates, reducing the weekly cash top-up needed on rental properties
Regulatory tailwinds, including eased LVR limits for new builds and full restoration of interest deductibility
That uptick in investor share shows the sector is coming back with conviction, a strong signal that certain housing segments, like townhouses, are regaining appeal.
Final Thoughts
Oversupply is a red flag every investor should respect; no one wants to get stuck holding assets in a saturated market.
But let’s be brutally honest: New Zealand isn’t built on oversupply. Years of restrictive consents, government bungles like KiwiBuild, and tight zoning have created a structural scarcity that still underpins housing demand.
Take Auckland and Christchurch, two of the country’s biggest growth engines. Despite headline-grabbing newbuild projects, there’s no real evidence of oversupply anywhere near the scale that would threaten prices or investor returns.
The population growth is tangible, persistent, and outpaces the pipeline of new homes, creating ongoing pressure that keeps the market ticking, subject to external shocks.
So yes, watch inventory and prices closely. But don’t fall for alarmist chatter just because you see cranes on the skyline. The true picture is nuanced, and right now, it’s one of cautious optimism, not oversupply panic.
While oversupply isn’t here today, investors should monitor upcoming urban policy changes, migration shifts, and affordability pressures that could disrupt this balance.
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