In Knight Frank’s latest Global House Price Index Turkey retained the top ranking for the fifth consecutive quarter, with house price growth of 13.9%.
However, Knight Frank residential research specialist Kate Everett-Allen said New Zealand is fast catching up.
New Zealand’s year-on-year growth came in at 13.5%, meaning it retained its second place position on the index.
But its six monthly and three monthly growth (at 9.4% and 5.8% respectively) was ahead of Turkey’s growth over those measurement periods.
Just over a year ago, Knight Frank ranked New Zealand fifth globally for house price growth.
Overall, the index increased by 5.3% in the year to September, which was its highest rate for two years.
Everett-Allen said while global housing market trends followed a similar narrative in the last quarter, a growing list of challenges means it’s unlikely to be ‘business as usual’ next quarter.
Challenges include resurgent price growth in China, Brexit and an expected US rate rise.
“The consensus view is that 2017 will be a bumpy ride both economically and politically, with stimulus coming in the form of fiscal rather than monetary policy,” she said.
“That said, low rates are likely to persist in Europe at least, but hikes in the US will result in a stronger dollar with implications for global capital flows and emerging markets.”
The Knight Frank index results are yet another indication of the heated nature of New Zealand’s housing market – despite recent moderation.
In a speech yesterday, Reserve Bank governor Graeme Wheeler said the main domestic risk facing New Zealand’s economy is a significant correction in the housing market.
“Numerous measures indicate that New Zealand house prices are significantly inflated relative to usual valuation indicators.”
Wheeler pointed to IMF data showing that New Zealand had the third highest real increase in house prices among 64 countries in the year to June 2016.
New Zealand also had the greatest deterioration in the median house price to median income ratio of 31 advanced countries in the period 2010 to mid-2016, he said.
“OECD data indicates that, relative to their long-term averages, New Zealand has the highest house-price-to-rent ratio, and the second highest house-price-to-income ratio among the OECD economies.”
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