The New Zealand Institute of Economic Research has ruled out any housing shortage in New Zealand but cautioned against such shortage in coming years in case of slow house buildings activities.

Shamubeel Eaqub, Principal Economist at NZIER said recent rising trend in house prices is just an illusion that is indicating mismatch between demand and supply.

Eaqub added, "If the mismatch was a physical imbalance between demand and supply we would expect to see rents rise rapidly. This has not been happening in the New Zealand market."

Eaqub also added that housing rents have been continuously decreasing as indicated by Rent bond data. It has also observed that household is becoming smaller and hence the number of households is increasing more rapidly

Housing construction activities are slowing with time which has practically halved from a peak annual trend rate of 27,000 in 2007. Some market experts say that new housing building activities may remain feeble till the first half of 2010.

However, population in New Zealand has been experiencing steady growth which requires suitable home building growth to maintain pace between demand and supply.