It’s not just people getting high from cannabis – house prices are being affected as well.
The New Zealand government passed a bill to legalise medical cannabis for terminally and chronically ill patients nationwide. Now, the country is preparing for the referendum to be held in 2020 for the legalisation of recreational cannabis.
As New Zealand moves closer to marijuana legalisation, many are speculating on how it will affect society and the economy of the country. While some are worried about the effects on health and safety, many are optimistic about potential tax revenues and reduced crime rate following the inevitable legalisation.
Another surprising area that people are nowadays talking about is how legal cannabis will affect the housing market in New Zealand.
Cannabis legalisation may increase house prices in New Zealand
Before legalisation, people assumed that if cannabis was made legal, house prices could fall. Cannabis is often associated with crime and negative social effects. However, as the process of pursuing legalisation rolled out due to increasing global acceptance, people began to notice exactly opposite of what they had expected.
Evidence from recent researchers suggests that house values in the areas where cannabis is legal, especially for recreational purposes, have increased significantly. The prospects of employment and desire to grow, purchase or self-medicate with cannabis make people move to states with legalised marijuana, leading to an increased demand for housing, and boosting home prices.
Evidence from the USA
Colorado became one of the first two U.S. states to legalise recreational marijuana in 2012. A new study reports that the cannabis legalization produced an average of six percent - $15,600 per house - increase in housing prices in the areas where recreational marijuana was available.
Using data on home sales between 2010 and 2015, the researchers compared the increase in home prices in Colorado municipalities where retail marijuana sales are legal, to home prices in Colorado municipalities where marijuana sales are illegal. They found that there was a major increase in home values in municipalities that legalised retail cannabis sales.
This highly detailed study, published in the July 2018 issue of Economic Inquiry, shows that recreational marijuana laws attract more migrants – including marijuana users, entrepreneurs and job-seekers – to relocate, which drives up housing demand. As existing residents become more willing to stay in place, the housing supply drops and demand rises, leading to an increase in property values.
Similarly, in Denver, the legalisation of cannabis has led to a 15 percent rise in house prices, with the average residential property now costing $40,000 more than last year. The state legalised cannabis in 2014, and since then thousands of marijuana consumers and job-seekers have moved to the state to benefit from its legal marijuana industry.
Increasing social acceptance and expanding job markets
Cannabis legalisation could affect house prices in New Zealand in the same way as it did in Colorado and Denver. Legalisation affects the housing market because of the growing social acceptance of cannabis and growing cannabis job market.
The past few years have seen sweeping legislative and cultural shifts favouring cannabis across the globe. Increasing health claims and campaigns around marijuana have changed the way people think about the drug. Now, people don’t mind living in areas where cannabis is legal.
A poll conducted by the New Zealand Drug Foundation showed the support had increased significantly for cannabis law reform. Support is increasing not only for the decriminalisation of medical cannabis, but also very strong for personal use.
Increasing jobs in the legal marijuana industry is another major reason behind surging house prices. According to a report from Vangst (a cannabis-based recruitment agency) legal cannabis cultivation, retail sales management, grow houses and budtending are some of the most popular jobs in the cannabis market.
But as the legal marijuana space continues to professionalise, jobs in finance, operations, and compliance are also opening up, with a significant 690% increase in overall marijuana industry job listings between January 2017 and August 2018. Average salaries in the marijuana industry grew 16.8% between 2017 and 2018.
The real difference that legal cannabis will make to the house prices in New Zealand will be seen only after the cannabis legalisation referendum, planned to be held in 2020. People foresee a bright future by pursuing a career in this industry, and so they don’t hesitate to relocate to the areas where cannabis is legal – and pay higher for accommodation.