Price Rise: NZ Housing Crisis Continues To Bite Kiwis

Source: Artazum Shutterstock

Summary

  • NZ middle-class and first-time home buyers sweat it out, as affordable accommodation appears to be distant dream.
  • Housing issue continues as their prices escalate to a record high of 16.1% since 2006.
  • Government trying to suppress this property inflation by introducing several measures

      Source: Copyright © 2021 Kalkine Media Pty Ltd

Housing prices in New Zealand noted 16.1% increase in 2020, the highest jump ever seen in the country since 2006.

First-time buyers are feeling the heat of price rise because an average home in Auckland is priced more than $1.2 million. Also, out of 19 identified regions, 14 regions are experiencing a record high in their property prices.

Given the scenario, first time home buyers constitute 23% of the total market and the middle class is in a big dilemma of purchasing their dream home.

Continuous Rise In House Price

Source: Copyright © 2021 Kalkine Media Pty Ltd

New Zealand has been witnessing an enormous increase in its house price over the past one year.

According to Real Estate Institute data, the median house price has increased 23% annually, with a jaw-dropping high of $780K in February. The country's most populous urban area, Auckland saw a record high of 24% in the property market, i.e. about $1.1 million in February 2021.

Moreover, prices across the country further increased by 2.2% in March, as per CoreLogic's House Price Index. With this unprecedented increase in house price, all the eyes are now set on the country as to how it will settle the property price bubble.

It is noted that real-estate investors constitute the largest segment of property buyers. In 2020, around 15K people who already had five or more houses, again bought houses for themselves. This leaves very little room for the first-time buyer who is aiming for an average house amid the escalating property prices.

IMF Intervenes To Resolve the Pricing Issue

The unsustainable house prices caused IMF urging the NZ government to introduce a comprehensive policy wherein the price growth commensurate with the income. Further, checks on speculative demand and a balance between demand & supply of houses is required on an urgent basis, as stated by the IMF.

The Fund also pointed that fiscal and monetary support should not be withdrawn hastily as it would result in greater uncertainties.

Relentless Efforts By NZ Government

The Government is trying its best to control the inflating property market by introducing numerous policies and guidelines, be it change in LVRs, strict mortgage rates, cheap interest policies, bright-line test, etc.

The Ardern government is leaving no stone unturned to check on the speculators and investors. Capital gains tax on property speculation has also been increased by introducing capital gains tax on the profit arising from the sale proceeds of the property, which was held for not more than ten years.

Moreover, recently, the NZ government stated that to make speculation least alluring, it plans to bring down tax incentives and release more land in the market to increase the housing supply. This would make way for affordable homes, which would greatly help the first-time buyers and the middle-class strata.

Road Ahead

The nation is hopeful that with government intervention on investment properties, there will be some respite in the growing house prices and the country might get to witness a drop in it soon.

 


Disclaimer
The website https://kalkinemedia.com/nz is a service of Kalkine Media New Zealand Limited (Kalkine Media), Company Number: 8107196. The principal purpose of the content on this website is to provide factual information only and does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) or engage in any investment activity under discussion. We are neither licensed nor qualified to provide investment advice through this platform. In providing you with the content on this website, we have not considered your objectives, financial situation or needs. You should make your own enquiries and obtain your own independent advice prior to making any financial decisions.
Some of the images that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed on this website unless stated otherwise. The images that may be used on this website are taken from various sources on the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image. The information provided on the website is in good faith, however Kalkine Media does not make any representation or warranty regarding the content, accuracy, or use of the content on the website.
   
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK