New Zealand’s Property Market Expansion

Apparently the Reserve Bank of New Zealand wants to see a slow down of activity in the domestic residential property market to rebalance the local economy…they will be decidedly displeased to learn about New Zealand’s property market expansion as witnessed in September 2006 then!  In September the number of new housing permissions granted reached an eighteen month high and QV announced that house prices in New Zealand had risen consistently by over 10% in the year to date! 

It seems that not all of the steam has gone out of New Zealand as a property investment hotspot after all…

It’s true, the Reserve Bank is keen to see more New Zealander’s spending their hard earned cash on exports in a bit to readjust the economy and to move the current intense focus away from domestic spending - but seemingly no one is currently listening!

The number of new permissions granted for the construction of residential housing in New Zealand in September 2006 shot up to highs not seen since eighteen months previously when there was actually an artificial spike in activity brought about prior to certain building regulation changes.  This proves that demand remains strong and there is resilience in the market suggesting that it is not about to bottom out or slow down significantly any time soon.

Add to this the data collated over the year to September 2006 and reported by QV (Quotable Value, the nation’s largest expert property advisory) at the start of October revealing that house prices in New Zealand are still very much on the increase – even in hotspots such as Auckland, Hamilton and Wellington – and you have all the evidence needed to prove New Zealand’s property market expansion.

According to a spokesperson from QV, the continued positive activity in New Zealand’s real estate marketplace has a great deal to do with domestic spending power and patterns as well as net inward migration rates both of which have been fuelling demand – and there is sustained interest from overseas investors and direct purchasers too meaning that currently demand is increasing which resulted in an increase of over 6% month on month for new housing permissions in September.

Even in spite of all of this positive data and irrefutable facts pertaining to the positive progress of property in New Zealand, there are still those who believe that the market is on the brink of a slowdown or reduction in fortunes…

Shamubeel Eaqub, an economist from Goldman Sachs commenting on the news that new residential construction permissions had reached an eighteen month peak, stated that it is his company’s belief that there would be an oversupply of housing, an increase in the cost of construction and an increase in interest rates all happening at about the same time that will cause a slow down in the housing market in New Zealand imminently and for the short term - whether the economist is right, we shall have to wait and see but in the meantime, those with property assets already bought in New Zealand must be confident that they are sitting fairly pretty!

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