We had an 'undersupply' problem in NZ until very recently. It seemed like it was all the media ever talked about. Then inflation hit, rates went up, and property prices started declining rapidly (current rate of decline looks like NZD5000/w on a median priced home over the past few months). Suddenly, the number of properties on the market is up 2-3x in the major cities and available rentals have doubled in places. Rents are falling even as commentators claim landlords will try to pass on their increased holding costs to their tenants.

Where have those properties all come from?

Consider that all properties are either investments or owner-occupied. By definition owner-occupiers don't keep empty (or underutilised properties - assuming second homes and holiday homes can be categorised as investments). Therefore, if there are more investors active (or more correctly, investment properties) in the market, the proportion of empty or underutilised homes is going to be higher. Investment activity in the market has undoubtedly been increasing for some time.

What appears to be happening is that our underutilised housing stock is now being revealed as investors panic. The same thing happened in Ireland during the GFC.

There are many reasons investors will leave properties empty or underutilised during a speculative boom (renovating to flip, on the market, good old fashioned landbanking, a convenient city pad or holiday home, etc). There is much more of this about than people realise.

I am very confident that rising interest rates are going to turn out to be a good thing for renters and first time buyers. It'll just take a bit of time and some economic upheaval.