By Shamubeel Eaqub, Chief Economist, Simplicity Research Hub


In Rotorua, it has been accompanied by positive effects on jobs, but negative effects on housing.

Rotorua has had strong population growth since 2014, after 15 years of very slow growth, according to new Subnational Population Estimates from Stats NZ.

The left chart (below) shows the actual population of Rotorua, versus population projections over time. 2024 was below the latest projections, but many thousands more than projected following previous censuses.

This unexpected population growth is explained by a reversal in migration, both regional and international. Migration went from net negative, to net positive, see right chart. Although this was volatile during pandemic years. The population increase via migration has been in prime working age groups (25-55).

The jobs story is positive, suggesting the population growth has added job opportunities.

Employment has grown as a share of the population - that is jobs have grown by more than population. Around 6,100 more people have jobs compared to a decade ago: 2/3 are jobs located in the district, and 1/3 outside (that is net commuters).

Commuting is the fastest growing employment opportunity in Rotorua (+2,080 over the past decade), ahead of the next two biggest gainers in jobs (food & beverage services +700; hospital +500). So, its not just 'local' economy, but the geography of economic opportunities are wider than the administrative boundaries of Rotorua.

The housing story has been less positive. Over the past decade Rotorua has experienced:

• housing demand growth of around 354 households per year
• residential consents of 245 a year
• net new homes (proxied by increase in residential electricity meters) of 72 a year
  

That is a big shortfall (cumulatively around 2,500 homes). But things are improving. Consents have surged in recent years, the housing register (waitlist for public housing) has reduced modestly and rents are no longer rising faster than incomes (rents went from being quite affordable to now being just as unaffordable as the rest of NZ).

This example shows that the local economy has been quite responsive to an unexpected surge in population. Even though local businesses haven't created all the new jobs, the wider region has created more job opportunities.

But the housing market is less responsive. Recent acceleration has been facilitated by good on the ground coordination, including from central government agencies. This reconfirms the need to keep improving our housing supply responsiveness across the housing continuum. 

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