Auckland Harbour and Sky Tower – New Zealand [Photo credits to Travelling Pooh on Flickr]
From the standpoint of someone living in the UK, New Zealand’s housing market exhibits some familiar trends. Overall the situation seems benign for the middle aged and much less so for younger people who have yet t0o get a foothold on the property ladder. New Zealand mortgages tend overwhelmingly to be fixed (85% of the total) and this skews the impact of the Reserve Bank of New Zealand’s interest rate (Official Cash rate – OCR) rises in a similar way to the Bank of England’s; causing a marked time lag between a rise and the looked-for effect. In fact, New Zealand’s interest rates are the second highest in the developed world (after Iceland’s).
At the moment house prices seem to be rising at an impressive rate. Quotable Value New Zealand, the property valuation arm of Statistics New Zealand recorded an average rise of 12.2% in the 12 months to June, the highest increase recorded since (the 12 months to) May 2006. Despite the steady rise in interest rates so far this year and the estimated 26% of fixed rate mortgages that are up for renewal in the next two months, commentators seem unsure as to whether there is going to be a housing downturn.