Is NZ’s property market unproductive, or does it play a far bigger role in the economy than many people realise? In this episode, we unpack whether property truly drags on growth or whether the numbers tell a very different story about NZ’s property market unproductive narrative.
Is NZ’s Property Market Unproductive or Just Misunderstood?
A common argument is that investing in property is unproductive compared to investing in businesses or shares. The logic is simple: buy a house, rent it out, sell it later – who does that really employ?
This is often contrasted with investing in companies like Fisher & Paykel Healthcare, which employ thousands of people and contribute directly to exports and supply chains. But the conversation becomes more complex when we look at what people are actually doing with their money. Rather than investing in New Zealand businesses, many investors are putting capital into overseas markets like the S&P 500 -raising the question of how productive that is for New Zealand’s economy.
The Numbers Behind NZ’s Property Market Unproductive Claim
When we move past perception and look at the data, the idea that NZ’s property market is unproductive starts to fall apart.
Property contributes more than $50 billion a year to New Zealand’s economy – around 15% of GDP – and that figure has doubled over the past decade. The sector also employs approximately 235,000 people, representing 10% of the national workforce.
Property activity stretches well beyond owning a house. Construction materials, manufacturing, real estate services, property management, trades, maintenance, photography, lawn care, and professional services all rely on a functioning property sector. Around $30 billion of the industry’s contribution comes from manufacturing alone.
Property Isn’t Just Housing
Another misconception is that discussions about productivity only relate to residential investment properties. In reality, property is a broad asset class that includes commercial, industrial, office, and mixed-use developments.
Commercial and industrial property, in particular, enables businesses to operate, expand, and hire staff. Without physical premises, many productive industries simply couldn’t function. Treating all property investment as the same ignores the diversity of assets that sit within the sector.
KiwiSaver, Property, and Domestic Investment
Property also plays a role within KiwiSaver. Of the $123 billion held in KiwiSaver funds, $3.6 billion is invested in property. Fourteen out of thirty-eight KiwiSaver schemes report exposure to unlisted property, most of it based in New Zealand.
Some providers are using KiwiSaver capital to directly address housing supply by building higher-density developments close to infrastructure and city centres. This approach focuses on building smarter rather than simply expanding cities outward, aiming to improve efficiency and address long-term structural issues.
Can NZ’s Property Market Be More Productive?
Rather than asking whether property is productive or not, the better question may be how to make it more productive.
Ideas discussed include shifting investment toward commercial and industrial property, modernising construction methods, improving build quality, and focusing on smarter intensification. There is also debate around attracting offshore capital into specific parts of the market, particularly high-value housing that does not compete with typical first-home buyers but brings additional spending and investment into New Zealand.
Key Takeaways
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NZ’s property sector contributes around 15% of GDP, or $50 billion annually
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The industry employs 235,000 people, more than retail
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Property supports manufacturing, construction, and a wide range of service industries
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Not all property is residential – commercial and industrial assets are critical to economic activity
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Offshore share investing may be less productive for NZ than often assumed
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The real opportunity lies in making property investment smarter, not dismissing it entirely
Next Steps
If you’d like to learn more, check out these other episodes below.
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Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
