Tree species richness–productivity relationships (SPRs) at community level are generally positive but can weaken at individual levels due to increased competition. Using 12 years of growth data from a large forest biodiversity experiment, we examined effects of neighbourhood tree species richness, basal area, and niche differences on focal tree growth over time. As stands aged, the effect of greater neighbourhood basal area in more species-rich neighbourhoods on focal tree growth shifted from positive to negative, but this negative effect was offset by increasingly positive effects arising from greater niche differentiation between focal trees and their neighbours. Focal trees with acquisitive traits showed stronger growth responses to neighbourhood competition and niche difference; while the responses to neighbourhood richness were more positive in dry than in wet years. Our findings suggest that larger niche differences can balance increased competition in more species-rich forest stands, thus allowing these stands to maintain a greater total biomass than less diverse forest stands.