house prices

PHOTO: “We do not want first-home buyers and our younger generations to think that buying a house is unachievable.” Photo credit: Getty.

Skyrocketing house prices are not sustainable for the local economy, according to Real Estate Institute of New Zealand chief executive Bindi Norwell.

House prices in nine regions hit new highs in September, bringing the national median cost to a record $685,000.

The Real Estate Institute’s House Price Index, which measures the changing value of property in the market, increased 11.1 percent year-on-year to 3145 – a new high – and the first time the index for New Zealand has gone over the 3100 mark.

Gisborne, Taranaki, Otago, Bay of Plenty, Manawatu/Whanganui, Wellington, Waikato, Canterbury and Auckland all reached new median price records.

Norwell told Morning Report that for areas such as Canterbury, a region touted by politicians as a place with strong supply, it was demand driving up prices because of Covid-19.

“There’s approximately $10 billion that people would traditionally spend on overseas travel and now they’re thinking ‘what can I do with this extra additional cash that I’ve got’ and so property has been a popular choice and it’s because people are thinking it’s a good long-term investment.

“And I think that also people thought that prices may go down post-Covid and it hasn’t happened and so this is stimulating people’s thinking ‘better get into the market now before prices keep going up’.”