The New Zealand property market is currently ‘on fire’ thanks to Covid-19 and low interest rates – it’s now cheaper to buy property in London or San Francisco than Auckland

Mar 24 , 2021

Auckland’s homes are selling very quickly, particularly for off-plan projects. Photo: handout

Homes cost an average of 5.1 times people’s median income in Auckland and only Hong Kong, Vancouver and Sydney are more expensive

The number of houses on the market in New Zealand are at an all-time low and developers are rushing to push through new projects to meet demand

New Zealand’s house prices have become “ridiculously expensive”, according to a major new report.

The just-released 2020 Demographia survey, which compares median house prices to median household incomes across 301 housing markets in eight countries, lists every New Zealand city as severely unaffordable, with house prices greater than 5.1 times median household income.

One of the homes in the Amaia of Takapuna housing development in Auckland’s North Shore. Photo: handout

Dr Eric Crampton, New Zealand Initiative’s chief economist and author of the foreword to this year’s report, says that among major housing markets, only Hong Kong, Vancouver and Sydney were more unaffordable than Auckland, where the median home now costs 10 times the median household income. “Toronto, London, and even San Francisco proved slightly more affordable than Auckland,” he said.

In Wellington, the median multiple increased to 7.7, while Christchurch housing costs 5.8 times median household income. Dunedin’s median multiple was 8.1.

The latest data from the Real Estate Institute of New Zealand (REINZ) supports this runaway trend. Annual price growth of 19 per cent pushed median house prices to a new high of NZ$749,000 (US$535,000) in December, while the total pool of properties available for sale nationwide has fallen to a record low.

It’s no surprise that homes overlooking New Zealand’s top beaches have become popular as a result of Covid-19. Photo: handout

Bindi Norwell, chief executive at REINZ, said the record high median prices achieved in 11 regions and 27 districts was “a continuation of the pattern we’ve seen for the last few months, highlighting how strong the residential housing market is in all parts of the country.”

“With half the inventory levels we had back in December 2018, there just isn’t enough choice for people looking to purchase,” Norwell added.

This lack of choice and high levels of confidence is also causing properties to be sold at the quickest pace in 17 years, she added. “When you add into the equation the fact that there are record low interest rates, it means that people are more willing to compete to secure the property they want.”

New Zealand boasts beaches, ski resorts and beautiful countryside so it’s no wonder both locals and Chinese clients are rushing to buy. Photo: handout

While in August 2018 New Zealand tightened its rules on property ownership by foreign nationals, there are still some opportunities. According to the legal department of REINZ, overseas investors may purchase an apartment in a large development that has been granted an exemption certificate without needing consent. If a development does not have an exemption certificate or they want to buy an apartment that is over the 60 per cent limit for an exemption certificate, foreigners can apply for a one-off consent. They cannot live in the apartment and must on-sell it within a time frame set by the Overseas Investment Office.