New Zealand’s housing market has seen median house prices rise by 8.64% year-on-year to February this year, according to the Real Estate Institute of New Zealand (REINZ).
New Zealand consists of 12 regions, and 11 of these saw house price rises during the same period, with the largest price rise taking place outside the country’s capital city of Auckland. Caterbury/Westland registered the biggest house price jump, of 12.4% year-on-year, while Auckland trailed in second place with a 10.7% rise. Southland came in third with an 8.3% rise.
While the Caterbury/Westland area experienced the biggest rise, Auckland housing remains the most expensive in New Zealand. Average house prices in Auckland hover at the NZ$592, 000 (US$506, 000) level, while Southland’s property is cheapest, at an average of NZ$195, 000, or US$166, 000.
With house price rises distributed more or less evenly across New Zealand, it’s clear that the cause is not the flow of international money that has driven the Hong Kong market upwards, or that has driven London prices ahead of the rest of the UK. Instead, New Zealand is riding the back of an economic uptick that has seen some of the gains of the boom years regained.
New Zealand is remote, but it’s a popular tourist destination. In the years 2001-2007, New Zealand house prices rose by 123% – 87%, adjusted for inflation – but they fell sharply as the 2008 crash bit. While the effects were serious, they were far less severe than in other countries;fell by 8.94% in 2008, but rebounded 523% in 2009, while the rest of the world had barely begun to recover and in some countries, the severity of the crisis was only just becoming apparent.
New Zealand’s economy grew by 3% in 2013, up from 2.7% in 2012, but this year the country is projected to experience the strongest economic growth for seven years, with GDP projected to grow by 3.3%, according to the Organization for Economic Cooperation and Development (OECD). Growth is led by an upswing in household spending.
Historically, New Zealand hasn’t had much of a separate housing market. House prices have risen in step with GDP, rather than housing being a site of investment, speculation or other forms of economic activity in itself. From 1992 to 2001, New Zealand Housing prices led GDP by about 0.3% yearly. Interestingly, the big jumps in house prices in the boom years were mostly concentrated in the historically remote and economically depressed South Island; tourism was at least partly behind this.
For the future, economic growth is likely to be significantly led by house prices, but the underlying economic strength of the country is a key factor in house price growth. Tourism, consumer spending and relatively low inflation are all contributors to this trend. New Zealand’s remoteness has always made it a marginal choice for expatriate Britons, who tend to prefer Australia; with its surging economy (still slightly less productive than the British, true, but growing faster) and gentle housing boom, New Zealand should be higher up the list than it is!