PHOTO: NZ Property Market
New Zealand’s housing market looks primed for another rally in house prices, with low-interest rates and constrained sales stock fuelling the fire. However, the market is set to cool by mid 2021.
That’s the view of Brad Olsen, senior economist at Infometrics, following a review of property data supplied by homes.co.nz.
Olsen says there’s less scope for house price growth to continue at current levels as an “undersupply of housing across parts of the country begins to be addressed in earnest”.
“Auckland is already showing more heat than many were thinking possible at this point,” he says. “With homes.co.nz’s HomesEstimate for New Zealand’s largest city up 0.2% in the year to February 2020.
“An undersupply of housing still exists in Auckland, which is supporting price growth – as is lower interest rates – which have pushed past affordability restraints seen in early 2019.”
Heading south to Dunedin, Olsen says the city remains a “standout performer”, with prices rising by almost 17% in the year to February according to homes.co.nz’s HomesEstimates.
“The rapid rise in house prices in the south have seen median prices in Dunedin surpass prices in Christchurch, with very different drivers behind activity in both areas,” says Olsen.
“Dunedin’s economy, and that of the wider Otago region, is growing at pace. The strong local labour market has seen an increase in those moving to the area, which has put pressure on housing.
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