Demand for Property in New Zealand Easing

Summary: The overall demand for property in New Zealand has diminished in the year to date but the market remains healthy

Quotable Value, New Zealand’s largest property information company and real estate market valuation experts have just released their latest housing market growth statistics for the year to August 2006.

The statistics highlight the fact that demand for property in New Zealand is easing but that the property market remains healthy, competitive and attractive for both investors and home seekers – especially those who are in a position to take a long term view of the housing market and the profits and returns that it can produce.

The demand for property in New Zealand that was responsible for an ever expanding house price bubble over the past three years has eased as a result of home ownership becoming more expensive and the gap between affordability and property price widening – this has reduced much of the speculation from New Zealand’s housing market and created a more stable but slower moving environment. 

The statistics and growth figures from Quotable Value prove that markets such as Auckland’s have an evergreen appeal because the city remains one of the fastest growing and most dynamic in New Zealand and it has a constant throughput of residents and workers all seeking property for sale and rent. 

Auckland’s central housing market expanded by over 7.5% from August 2005 to August 2006 which means that it remains a location with growth potential for investors seeking both capital appreciation over the medium to long term (short term strong gains and required market liquidity for the realisation of gains are unlikely as demand and purchasing power have decreased to the point where a short term approach to investing in property in New Zealand is probably unwise) and strong rental income for the foreseeable future.

The markets in New Zealand that witnessed the strongest annualised growth were the markets that were behind the initial trend for expansion – locations such as Rotorua saw growth in excess of 20% in the past year but as stated, this has more to do with it playing catch up than on the overwhelming appeal of the location for investors or home buyers.

Demand for property in New Zealand has dropped significantly and has resulted in the annual growth rates in even the most popular areas of the country slowing dramatically - but that does not mean that the appeal of residential real estate in New Zealand has diminished or that the house price bubble has exploded.  There was an average house price growth of 10.5% in New Zealand between August 2005 and August 2006 proving that despite lower activity, decreased demand and a broad gap between the average household income and house price, the desirability of New Zealand as a peaceful, beautiful and stable nation in which to live and the overall desire of the local people to own their own homes means that the market will remain healthy and continue to represent an excellent long term investment opportunity to those happy to earn a rental income today and resell years later for an attractive yet realistic profit.

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