New Zealand needs to come to terms with the fact that rising house prices are not a good thing, a new report says.
The research, conducted by Motu Research and Victoria University, shows that renters' wellbeing has fallen as property prices have risen.
Between 2005 and 2021, house prices rose 142%.
They have since fallen, but are only about 15% from their peak.
Motu Senior Fellow and Victoria University professor Arthur Grimes said the increase had deepened inequalities in New Zealanders' wellbeing.
"People who own their house outright, who don't have a mortgage, to some extent they benefit a little bit from house prices at least in terms of a wealth effect.
"But relative to those people everyone else suffered. We see in particular renters are worse off and they have less to spend relative to outright owners.
"What we find also is that when they're asked to rate how good their life is, renters suffer in terms of their life satisfaction, when house prices go up."
He said while people often talked about the housing market picking up, or prices rising, as a positive thing, it was bad for people who were renting and getting further from home ownership, and bad for the economy more generally.
"It's bad for the 40% of people who rent and they're obviously the poorer people in society generally.
"So basically rising house prices contribute to greater inequality and worse living standards for many people in the population."
More homes the answer
He said the Government had helped by making it easier to build houses.
"The more houses you build the lower the prices will be. We've seen that in Christchurch… so that's one big thing.
"We've got to be really careful with monetary policy that it doesn't cause another boom in house prices… there's also a whole heap of things that need to be done on the rental side to make renting better."
He said that part of the housing market was often forgotten because often they were not the people who voted.
"Renters are less likely to vote in central government elections and far less likely to vote in local government elections.
"And a lot of the problems with housing supply come from local government.
"So the people who actually end up voting for our politicians want higher house prices because they've got a house and it just seems to crowd out all the people who need to get into the housing market and can't."
He said the impact was most acutely felt by older people and people in more expensive areas.
The study also found inflationary macroeconomic policies have helped drive property prices up, which in turn has magnified wellbeing differences between homeowners and renters.
The researchers said policymakers can help close these gaps by considering how higher house prices and rents affect people's wellbeing - especially for renters - when designing monetary and housing policies.
"Good policy can ensure prosperity supports everyone, no matter their housing situation," Grimes said.
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