Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


House Prices Rise Above Trend

House Prices Rise Above Trend


Quotable Value NZ released quarterly provisional data on house prices around New Zealand. They showed that average prices rose 2.4% during the December quarter after gaining 3.0% in the September quarter and now lie 10.4% ahead of a year ago. Last year prices rose 3% and they fell 1% in 2000. The latest rise is the highest annual gain since September 1996 but is short of the 14.1% rise recorded for the year to June 1996.

Auckland prices on average rose 2.7% in the December quarter and were up 13.7% from a year ago. They now stand 10.5% ahead of their previous peak in the December quarter of 1997 and have risen 106% the past 10 years versus 69% for NZ as a whole. Nelson prices rose 5% in the quarter and 22% in the year, 50% 10 years, Wellington 3%, 10.6%, 93% Christchurch 1.5%, 5.7%, 38% Dunedin 2.1%, 5.3% and 13%.

On average since 1961 NZ house prices have risen 8.6% p.a., with inflation at 7.1% giving a price-adjusted gain of 1.5% p.a. with Auckland numbers of 9.6% and 2.5% after inflation.


The seven year high in NZ-wide house price inflation reflects the following.

A surge in population growth to 1.6% in 2002 from 1% in 2001 and an average of 1.1% per annum for the past decade.

Below average interest rates since mid-2001 and extremely low fixed interest rates.

Investor demand driven by discontent with alternative assets plus expectations of continued price gains.

Accommodation requirements of the growing foreigner education sector.

Low dwelling construction in 2000 and 2001.


Borrowers as the high 10.4% gain will make the Reserve Bank wary of high generalised inflation.

Exporters as the less the scope for easing monetary policy the greater the continued interest rate upward pressure on the exchange rate.

Builders as the price gains will draw people to building as opposed to buying existing houses.


Over 2003 we expect price gains of 5% and 10% with Auckland prices gaining 10% - 15% due to:

Continued below average interest rates for perhaps all this year.

Investor demand with shares still highly volatile and fixed interest returns very low.

Strong net migration gains over 30,000.

A tight labour market making people feel confident about servicing higher debt levels.

However, come 2004, although we expect NZ’s rate of growth to pick up toward 3% from a forecast 2.2% this year, producing faster jobs growth, it is likely that the rate of house price inflation will fall away in response to the following forces.

Supply catching up with demand.

Higher interest rates

Buyer reluctance to purchase at prices seen as too far above fair valuation.

At this stage we have no reason to forecast prices declining as they did on average between the December quarter of 1997 and September quarter of 1998 by 5.4% for NZ – with Auckland prices off 8.1%. Key factors to watch are interest rate jumps if war worries disappear, and migration flows.

© Scoop Media

Business Headlines | Sci-Tech Headlines


Onetai Station: Overseas Investment Office Puts Ceol & Muir On Notice

The Overseas Investment Office (OIO) has issued a formal warning to Ceol & Muir and its owners, Argentinian brothers Rafael and Federico Grozovsky, for failing to provide complete and accurate information when they applied to buy Onetai Station in 2013. More>>


Tomorrow, The UN: Feds President Takes Reins At World Farming Body

Federated Farmers president Dr William Rolleston has been appointed acting president of the World Farmers’ Organisation (WFO) at a meeting in Geneva overnight. More>>


I Sing The Highway Electric: Charge Net NZ To Connect New Zealand

BMW is turning Middle Earth electric after today announcing a substantial contribution to the charging network Charge Net NZ. This landmark partnership will enable Kiwis to drive their electric vehicles (EVs) right across New Zealand through the installation of a fast charging highway stretching from Kaitaia to Invercargill. More>>


Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>


Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>


Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news