Article on NZ Housing Market
Aug 28th 2003, 5:28 am
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Article on NZ Housing Market
Housing boom a stayer
28 August 2003
By ANN-MARIE JOHNSON
New Zealand's housing market is booming and it is not going to stop any time soon, the real estate sector and economists say.
New figures from Quotable Value show house prices jumped 14.2 per cent nationwide in the year to June.
Nelson topped the country with a whopping average price growth of more than 40 per cent but several areas had annual growth rates of more than 20 per cent, including Auckland City, Rodney, Taupo, New Plymouth, Dunedin and Invercargill.
There were also several areas where the growth was 10-20 per cent, including Wellington, Hastings, Napier, Masterton, North Shore, Manukau, Waitakere, Waikato and Tauranga.
Forecasters predict the rapid growth of the last two years might slow a little next year, but there is widespread confidence the boom will continue for at least another 12 months.
Three main factors are fuelling the consumer confidence behind the hot property market:
Migration (in the year ended July 2003, there was a net migration gain of 42,100) pushing up demand for housing.
Unemployment is at its lowest level in 15 years.
Low interest rates.
BNZ chief economist Tony Alexander said the boom had another year to run.
None of the factors affecting the market were expected to change significantly in the short term, he said. But he warned the market's vulnerability to a shock in 12 months time "is going to be very high".
Real Estate Institute president Graeme Woodley said the only cloud on the horizon was the strengthening New Zealand dollar making property less attractive to overseas investors.
Though many first-home buyers were finding it difficult to get into the market, the new Kiwibank scheme offering no-deposit mortgages to low income buyers, starting next month, would add fuel to the demand for houses, Mr Woodley said.
Deutsche Bank senior economist Darren Gibbs said the gap between house price inflation in Auckland and the rest of the country had narrowed to its lowest level since the end of 2001, showing the housing market boom was broadly based.
Rising house prices were historically linked to consumer spending, stimulating the demand for items like furniture and appliances.
"Solid domestic demand is providing a significant – but not complete – offset to the difficulties that are presently being faced in some parts of the external sector as a result of the appreciation of the New Zealand dollar," Mr Gibbs said.
Massey University real estate senior lecturer Graham Crews said he could not remember such a strong market in the last 30 years.
"There's always going to be some speculation but most of the market activity is people scrambling to get themselves a house because they want somewhere to live.
"Barring something off the wall happening, or from left field, I don't know how we are going to house everybody adequately in the medium-term."
Builders were struggling to keep up with the demand for new homes and more housing stock was needed to meet the needs of New Zealand's growing population, he said.
According to ASB Bank's chief economist Anthony Byett, house prices have risen about 23 per cent nationally since mid-2001. That was on a par with Britain, which is also experiencing a boom, where house prices rose 25 per cent last year.
Americans expect house prices to more than double in the next decade and prices in Australia are also skyrocketing.
28 August 2003
By ANN-MARIE JOHNSON
New Zealand's housing market is booming and it is not going to stop any time soon, the real estate sector and economists say.
New figures from Quotable Value show house prices jumped 14.2 per cent nationwide in the year to June.
Nelson topped the country with a whopping average price growth of more than 40 per cent but several areas had annual growth rates of more than 20 per cent, including Auckland City, Rodney, Taupo, New Plymouth, Dunedin and Invercargill.
There were also several areas where the growth was 10-20 per cent, including Wellington, Hastings, Napier, Masterton, North Shore, Manukau, Waitakere, Waikato and Tauranga.
Forecasters predict the rapid growth of the last two years might slow a little next year, but there is widespread confidence the boom will continue for at least another 12 months.
Three main factors are fuelling the consumer confidence behind the hot property market:
Migration (in the year ended July 2003, there was a net migration gain of 42,100) pushing up demand for housing.
Unemployment is at its lowest level in 15 years.
Low interest rates.
BNZ chief economist Tony Alexander said the boom had another year to run.
None of the factors affecting the market were expected to change significantly in the short term, he said. But he warned the market's vulnerability to a shock in 12 months time "is going to be very high".
Real Estate Institute president Graeme Woodley said the only cloud on the horizon was the strengthening New Zealand dollar making property less attractive to overseas investors.
Though many first-home buyers were finding it difficult to get into the market, the new Kiwibank scheme offering no-deposit mortgages to low income buyers, starting next month, would add fuel to the demand for houses, Mr Woodley said.
Deutsche Bank senior economist Darren Gibbs said the gap between house price inflation in Auckland and the rest of the country had narrowed to its lowest level since the end of 2001, showing the housing market boom was broadly based.
Rising house prices were historically linked to consumer spending, stimulating the demand for items like furniture and appliances.
"Solid domestic demand is providing a significant – but not complete – offset to the difficulties that are presently being faced in some parts of the external sector as a result of the appreciation of the New Zealand dollar," Mr Gibbs said.
Massey University real estate senior lecturer Graham Crews said he could not remember such a strong market in the last 30 years.
"There's always going to be some speculation but most of the market activity is people scrambling to get themselves a house because they want somewhere to live.
"Barring something off the wall happening, or from left field, I don't know how we are going to house everybody adequately in the medium-term."
Builders were struggling to keep up with the demand for new homes and more housing stock was needed to meet the needs of New Zealand's growing population, he said.
According to ASB Bank's chief economist Anthony Byett, house prices have risen about 23 per cent nationally since mid-2001. That was on a par with Britain, which is also experiencing a boom, where house prices rose 25 per cent last year.
Americans expect house prices to more than double in the next decade and prices in Australia are also skyrocketing.
