Property in New Zealand Encouraged by Healthy Economy

Property in New Zealand Encouraged by Healthy Economy The property market in New Zealand is remaining healthy despite caution having been urged recently for investors contemplating a move into the market.

Quite simply a healthy economy is supporting continued interest in New Zealand real estate and there are no factors apparent currently to undermine this situation.

The National Bank of New Zealand recently released its economic index for the nation and showed that New Zealand’s growth rate accelerated to 1.9% from 1.6% a year ago and at the same time the local currency dropped in value against the US dollar creating the perfect environment for increases in export activity. 

Increases in exports allowed companies to employ more personnel which boosted the job market, reduced the unemployment figures, allowed for increased consumer confidence which has continued to spill over into the property market.

These facts are supported by the findings of the Knight Frank Global House Price Index which suggest property prices have increased by 10.6% in New Zealand to the year ending June 30th 2006. 

In addition to these figures the Real Estate Institute of New Zealand puts house price inflation at 11% to the year ending July 31st 2006 and underlines and reaffirms the fact that New Zealand property remains an excellent investment commodity.

All of this positive data reaffirms the widely held view that global property markets are not on the brink of collapse.  However, in New Zealand there has been a softening of housing market activity compared to the boom period between 2001 and 2005.  The number of houses for sale, the rate at which they are selling and the overall strength of interest has decreased.

Part of the cause of a slowdown in market activity has been caused by the Reserve Bank of New Zealand increasing interest rates last year.  This resulted in current homeowners consolidating and cutting back on outlay in order to ensure that they can continue to keep up with mortgage payments and it also means that those contemplating a move have to seriously consider whether a move is actually worth it.

In conclusion, the combination of the positive fiscal facts shoring up New Zealand’s economy and the local population’s cautious approach to consumer spending over-extension means that the New Zealand property market is strong and underpinned by solid data, facts and figures but that it is slower moving and less dynamic than it was at its growth peak.

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