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Summary
- Kiwi land witnessing a colossal rise in its house prices for over a year.
- Low interest rates, government assistance were some of the main reasons for this huge rise.
- First-time home buyers facing the heat as affordable housing has now become a distant dream.
- The NZ Government is constantly making efforts and is hopeful of curtailing the skyrocketing property price.
For almost a year, New Zealand is experiencing exponential growth in house prices across the country.
As per CoreLogic’s latest report on NZ’s property market, the house prices escalated tremendously in the Q1 of 2020 with a rise of 7.2% on the national average. In December 2020, the prices were around $56,500, however, the average national value jumped to $845,491 in March 2021.
Average asking prices have also risen to record high in March, as per latest Trade Me Property data. It has been observed that Wellington saw the maximum Y-o-Y growth in price rise. Themedian asking price was up by 20% in contrast to the prices in the same month in the previous year. Also, Auckland’s rates too rose to 10% during the same period.
In March 2021, the demand for property was huge, up 26%, however, the supply was down 9%.
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The country witnessed a mammoth rise in house prices in almost every region except Nelson, Otago, West Coastand Northland.
Do Not Miss Reading: Why NZ House Buying Spree Refuses to Die Down?
Reasons Behind NZ’s Soaring House Prices
The skyrocketing property prices across Aotearoa were driven by extremely low interest rates, government aids amid the coronavirus pandemic times and people's FOMO driven mindset.
Even the most ramshackle and rickety homes in New Zealand were offered at a huge price.
It is also pointed out that New Zealand was one of the first few countries across the globe which had successfully curtailed the growth of COVID-19. Subsequently, It has became an epicenter for the real estate market boom.
Home Buying A Distant Dream For The NZ Middle Class
If the exponential surge in the housing sector continues at this pace, the Kiwi nation would soon become one the most overpriced and unaffordable housing markets across the world. The middle class and the first-time home buyers are finding it hard to buy their dream home.
Must Read: NZ Facing Massive Rise In House Prices- Will It See A Silver Lining?
Government Continuously Working Towards Curtailing The Price Boom
The NZ government is making constant efforts to curb the sky-high property prices. In March 2021, it had introduced considerable policy changes like changes in LVR (loan-to-value ratio), etc. to make home-buying affordable and within the reach of the needy.
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Moreover, it has extended the duration from 5 to 10 years to sell the property without attracting capital gains tax. The government has also abolished tax incentives for investors.
Must Read: NZ To Ponder On Capital Gains Tax To Revive House Prices, Urges IMF
NZ’s Prime Minister, Jacinda Ardern, has announced a new NZ$3.8 billion fund to accelerate both the pace as well as the number of the houses to be built, thus providing much-needed relief for the first-time home buyers.
As per reports, it is anticipated that the Jacinda government would be successful in decreasing the country’s property prices by 10%-20% and move GDP up by 1% point in the medium run.
