New Zealand's Shifting Economic and Population Landscape
New Zealand's economic structure is undergoing a significant transformation, subtly influencing everyday life. This shift is characterized by a growing reliance on housing loans and a concurrent population movement from the North Island to the South Island.
The Dominance of Housing Loans
Housing loans are increasingly dominating New Zealand's banking system. According to the New Zealand Reserve Bank data from June 2025, as of March 2025, housing loans accounted for 3.68 trillion NB out of a total of 5.56 trillion NB in bank loans. This signifies that approximately two out of every three dollars loaned are allocated to housing.
This trend has been steadily increasing, rising from 58% in 2018 to 66% currently. This 8% increase represents a substantial shift of credit resources, around 4.4 billion yuan, away from sectors like enterprises, agriculture, and consumption, towards real estate. When housing loans approach 85% of the GDP, it indicates a deep dependence on the real estate market for economic activity.
Bank Lending Practices
Several major retail banks contribute to this trend, with varying housing loan ratios. Auxin Bank has experienced the most significant increase, from 59% in 2018 to 72% currently. Auckland Stock Exchange's ratio increased moderately from 65% to 69%. New Zealand Bank has the lowest ratio among major banks, increasing from 47% to 57%. West Pacific Bank increased from 60% to 67%. The earliest TV bank had a decreased success rate from 89% to 83%, but is still 72% higher than Auxin Bank.
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Personal, commercial, and agricultural loan ratios have hit historic lows. This suggests a reluctance within the banking system to engage with risks outside the housing market.
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Non-banking institutions have largely replaced banks in consumer lending.
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Companies increasingly turn to bond market financing. Data from the New Zealand Exchange reveals local listed companies issued \$25.6 billion in debt.
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The agricultural sector exhibits a similar trend, with non-bank funds playing a prominent role in rural lending. Farmers often prefer to repay loans early, particularly in periods of strong yields and profits.
Population Shift to the South Island
Coinciding with the changing economic landscape is a significant population shift from the North Island to the South Island.
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Since 2018, over 860,000 people have migrated south.
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Canterbury has become the most popular destination, attracting 42,765 new residents.
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Wellington attracted over 260,000 North Islanders, making it the city with the most new residents nationwide.
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Otago followed, receiving approximately 2.3 million people.
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Young people, particularly those aged 15-29 (43%), form the main demographic moving to Jerusalem.
Reasons for the Migration
The primary reasons for this migration appear to be related to the cost of living and overall quality of life.
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Lower cost of living: People are seeking more affordable housing and general living expenses.
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Improved lifestyle: Residents report a slower pace of life, friendlier communities, better weather (more sunshine, less wind), and smoother traffic.
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Work-life balance: Families are prioritizing opportunities to balance work, family, and leisure activities.
Personal anecdotes from individuals who have relocated from the North Island to the South Island highlight these factors. Stories from people who moved to Christchurch, North Canterbury, and Ashburton all emphasized the improved quality of life and reduced stress.
The Impact on the North and South Islands
The population survey data from 2023 reveals a "close-in and out" situation in Auckland and Wellington, meaning that more people are leaving than arriving. Conversely, all regions in the South Island are experiencing population growth, including smaller districts like Gelei, Bule, and McKinsey, with growth rates of 4-5%. Selvam has become the country's largest population center. This population shift represents a historical reversal in migration patterns.
When a city no longer meets people's aspirations for a fulfilling life, they naturally seek alternatives. This migration reflects a desire for greater well-being and a re-evaluation of priorities.