New Zealand Property Growth Still Slowing

The majestic snowcapped mountains, beautiful waters and friendly people combine to make New Zealand a paradise for holidaymakers, retirees and expatriates.  With an estimated 215,000 Brits already calling this country home, the property market in New Zealand has enjoyed a long story of growth and prosperity.  All of that is starting to change as higher interest rates and falling buyer confidence take their toll on the New Zealand property market.

If you’ve been considering buying property in New Zealand, now might actually be a very fortuitous time to start looking seriously because New Zealand property growth is still slowing.  But whilst growth is down, it is not out just yet.  Double-digits are still attainable in the nation’s property market and holidaymaking is still a very big draw.  The average price growth however is falling and many believe the market will soon transform from a seller’s to a buyer’s.

Valuer QV is predicting the shift in trends following its recent release of a report on New Zealand property values.  The report places growth in October at 12.7%.  October was the third consecutive month where the growth rate dipped.  It was 13.2% in September and 13.3% in August.  The drops, although disconcerting to some, still show impressive growth here versus other markets.

QV believes buyers are taking more time to review their options and that developers and investors alike are moving ahead cautiously to see what happens next.  With average sales in the NZ 406,000 range, prices here have not really begun to take a hit as growth continues, albeit slower than before.  Investors in New Zealand looking for second homes or buy-to-let potential can find some reasonably priced opportunities if they look around enough, however.  That is likely to become an easier prospect if the slowing price trend continues.

What this means for investors is the potential for better prices in New Zealand in the future.  If the slow in growth and sales continues, prices are likely to fall as sellers work to make their properties more attractive.  Whilst buy-to-flip potential is waning, buy-to-let likely will not.  Rental yields are still quite attractive in the 5-to-7% range, depending on the area.

Tourism figures show that New Zealand remains a hot prospect for holidaymakers.  With an estimated USD 21 billion economic impact in 2007 alone, the industry is considered quite healthy despite New Zealand’s relative distance from Europe.  Demand is anticipated to grow by 4% per annum through to 2017.  The holidaymaking figures coupled with its ever-increasing expatriate community do make this country quite attractive to investors.

With growth slowing and the future uncertain, now is likely a good time to begin researching the New Zealand property market closely.  Investors who want to buy here are quite likely to find rather attractive bargains on the horizon.  Don’t expect prices to necessarily plummet however.  Considering the rather high starting point, buyers here will still likely face six-figure buys even if the slow-down drags on for a bit.

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