New Zealand property values increased at its fastest pace since 2008. Property values rose 1.3 percent from a quarter earlier, 9 percent from a year earlier, 8 percent in the last year, and 3.3 percent from early 2008. National median home values reached in excess of $400,000 and for Auckland it was $600,000. Ninety percent of the price increase came from the Auckland and Canterbury regions – these regions alone represent 52 percent of national sales.
The steepest price increase has been noticed in the Auckland and Christchurch areas, which have seen 16 percent and 7 percent increases. Outside these areas, price increase has taken place as well, but there were ups and downs. For example, Hamilton showed 4.6 percent increase in one year, but Tauranga showed only 0.3 in one year. Wellington area showed 3 percent increase in one year.
Easy credit, the cheapest interest rates in 50 years, and low supply are some of the main factors contributing to home price increases. One third of mortgage owners are getting into the market with 20 percent or less deposit. This number is up from a quarter of mortgage owners from one year ago.
A report from the Bank of New Zealand points out that home prices are overvalued and out of line with incomes. However, there is no immediate price correction on the horizon. And price correction won’t happen until there is a significant increase in the supply market.
In New Zealand, the housing sector represents 73 percent of household assets and 52 percent of bank lending represents residential mortgages. Meanwhile, in Australia the housing sector represents 56 percent of household assets and 38.4 percent of bank lending represents residential mortgages. Unlike other similarly developed countries, there was no housing crash during the global financial crisis in New Zealand and median prices now sit at 12 percent above the level seen during the financial crisis in 2007.
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