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House price growth in New Zealand is running at the second-fastest rate in the world, an international property consultancy says.
The Knight Frank Global House Price Index shows that, in the first quarter of this year, house prices globally were up 7.3 per cent in the year to March 2021. New Zealand hit 22.1 per cent.
That was the fastest rate of increase recorded since the last months of 2006 and reflected the runaway market growth seen in many countries.
Turkey had the fastest house price increases for the fifth consecutive quarter, with 32 per cent growth.
But Knight Frank researcher Kate Everett-Allen said that, if inflation was stripped out, Turkey’s real prices rose by around 16 per cent over the year.
Also, in the top ten were the US at 13.2 per cent, Sweden at 13 per cent, Austria at 12.3 per cent and Norway at 10.9 per cent.
Canada was ranked at 11 and Australia at 18 with 10.8 and 8.3 per cent annual growth respectively.
Everett-Allen said that with 13 countries recording double-digit price growth over the last year, it was no surprise that talk of post-pandemic housing bubbles was increasing.
But authorities were already starting to take action with cooling measures being introduced in a number of markets, including China, New Zealand, Ireland and Canada, she said.
In New Zealand, the Reserve Bank reinstated loan-to-value ratios earlier this year. In March, the Government announced a suite of new housing and tax policies intended to reign in the market.
Everett-Allen said, with governments taking action and fiscal stimulus measures set to end later this year in a number of markets, buyer sentiment was likely to be less exuberant.
“Plus the threat of new variants [of Covid] and stop/start vaccine roll-outs have the potential to exert further downward pressure on price growth.”
But the house price boom did not encompass every country and there were several large economies where strong price growth remained elusive and sales had yet to gain traction, she said.
They included Italy, India and Spain, which all recorded lower price growth in the first months of this year than they did last year. This was either due to stringent lockdowns, economic concerns or excess supply.
New Zealand’s rampant market has already attracted international attention this year.
In April, Bloomberg reported it as one of the least affordable in the world, while the 2021 annual Demographia international housing affordability report ranked Auckland’s market as the fourth least affordable in the world.
CoreLogic’s May data, released Tuesday, showed that price growth was starting to slow, although CoreLogic’s head of research, Nick Goodall, said it was unlikely to do so at the rate forecast by Treasury and the Reserve Bank.
But results from the latest survey by the Real Estate Institute and economist Tony Alexander suggested the market was in a holding pattern as buyers waited for Government clarification on the new tax policies.