Property

New Zealand house prices under threat

New Zealand's recent property boom may soon end in a dramatic correction that could see house prices fall by more than 15% over the next few years, the international weekly magazine Economist says in its latest issue.

Wednesday, June 09th 2004

New Zealand, a recent addition to the Economist's quarterly survey of global house price indicators, recorded the largest increase in prices across 16 developed economies in the first quarter of this year, rising 22% compared with the same period a year earlier.

In second place was Australia where prices rose 17.9% over the same period.

The magazine said Australia's housing bubble could be the first to burst and had already weakened.

The most recent figures showed prices had fallen by an average of 8% in Sydney and 13% in Melbourne in the first quarter of 2004. Anecdotal evidence suggested they had continued to fall since then.

The main reason for falls in Melbourne and Sydney house prices appeared to be that: "first time buyers have been priced out of the market".

Another factor was a dry-up in demand from buy-to-let investors following net rental yields falling below mortgage rates.

The magazine said house prices might eventually return to levels consistent with long term average price-to-income ratios.

Under such a scenario, over the next four years, New Zealand house prices would fall by 15%.

Read More - Opens in a new window
Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Wairarapa Building Society 6.95
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
BNZ - Classic 7.24
ASB Bank 7.24
ANZ Special 7.24
TSB Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

More Stories

Support for regulation

Monday, March 18th 2024

Support for regulation

REINZ has emphasised the need for property management regulation to Parliament’s Social Services and Community Committee.

A better investment market

Thursday, March 14th 2024

A better investment market

“Reinstatement of interest deductibility starting from the new tax year on 1 April brings property investors back in line with every other business in the country, where interest costs are a legitimate deductible expense," Tim Horsbrugh, New Zealand Property Investors Federation (NZPIF) executive committee member says.

[OPINION] Recessionary times

Thursday, March 14th 2024

[OPINION] Recessionary times

It is not the best out there for many businesses and property sector people. Sales are down across the board, our clients’ confidence is falling, and there is a lot of uncertainty.

Interest rate expectations: It’s not over yet

Thursday, March 07th 2024

Interest rate expectations: It’s not over yet

Most Kiwis think interest rate increases have peaked.