NZ 2nd in global house price index

Knight Frank’s latest Global House Price Index shows that New Zealand is one of the leaders of the pack when it comes to house price growth.

New Zealand posted growth of 14.2% in the year to December 2015. It was second only to Turkey which saw growth of 18% over 2015.

However, last year New Zealand came in at 20 on the list with growth of 6.0% in the year to December 2014.

Knight Frank residential research specialist Kate Everett-Allen said this jump in growth has left New Zealand as the world’s second least affordable market, after Belgium.

“Housing affordability, or the lack of it, is rising up policymakers’ agendas worldwide.”

Overall, the index shows the world’s housing market increased by 3% in 2015, up from 2.3% in 2014.

Forty-three of the 55 housing markets tracked in the index saw house prices rise.

Thanks to the strong performances of both New Zealand and Australia (in fourth place with 10.7% growth), Australasia was the strongest-performing world region in 2015.

Everett-Allen said global house price growth defied the economic climate in 2015.

Concerns over the global economy failed to dent buyer confidence - instead the lingering low interest rate environment influenced sentiment, she said.

However, Knight Frank’s outlook for 2016 is muted.

“We expect the index’s overall rate of growth to be weaker in 2016 than 2015,” Everett-Allen said.

“The global economy is experiencing a potentially dangerous cocktail of low oil prices, a strong dollar and a continued slowdown in China.

Meanwhile, in this morning’s monetary policy statement, Reserve Bank governor Graeme Wheeler said housing market pressure remained a domestic economic risk.

“House price inflation in Auckland has moderated in recent months, but house prices remain at high levels and additional housing supply is needed.

“Housing market pressures have been building in some other regions.”