But maybe not for long
New Zealand’s once-booming housing market is experiencing a dip in international rankings, according to data from real estate consultancy Knight Frank.
In the third quarter of last year, international annual house price growth across the tracked cities increased to 2.3%, up from 1.6% in the previous quarter.
Liam Bailey, head of research at Knight Frank, noted a shift in the housing market outlook compared to the previous year, Stuff reported.
“The rate of inflation in key markets is easing rapidly and interest rate cuts could arrive as early as the second quarter,” Bailey said. “Unlike this time last year – and barring any new crises – it's hard to see mainstream housing markets weakening meaningfully from here onwards.”
Turkish cities, particularly Ankara and Istanbul, claimed the top spots with the fastest growth rates of 102.7% and 77.6%, respectively. Dubai took third place, followed by Zagreb in fourth and Athens in fifth.
European cities occupied the lower ranks, with Stockholm, Bratislava, and Frankfurt all experiencing double-digit annual price declines.
Meanwhile, Auckland, the only New Zealand city featured, slipped to 84th out of 107 cities, recording a 3.3% three-month price growth and a 2.9% fall over 12 months.
Sydney secured the 13th position, showing a 1.9% increase over three months and a 6.7% rise over the year.
New Zealand cities have historically ranked high in global price growth tables.
Brad Olsen (pictured above), Infometrics CEO, suggested that Auckland’s current low position may be temporary.
“Given the level of population growth New Zealand is experiencing – the fastest since the 1950s – and how much that growth is concentrated in part around Auckland, there’s a risk that Auckland house price growth could accelerate away to a faster pace compared to international areas,” Olsen said. “If interest rates were to start to fall, there’s a rising chance of even stronger house price growth than we first imagined.
However, Olsen also expressed caution, highlighting the significant rise in interest rates and mortgage repayments.
“In a sense, the proportion of income needed to service a mortgage is extremely high and it seems hard to believe that more and more people would be able to afford these higher levels and push up demand strongly enough to boost prices even further than thought,” Olsen said. “But demand is up with that population growth and future supply is more limited, with lower consents issued.
Bailey acknowledged the global expectation of decreasing interest rates in the coming year but cautioned that the cost of debt would likely settle at a higher level than pre-pandemic.
“The timing and extent of interest rate cuts will dictate how the year pans out in housing markets and investors continue to take the view that central banks are being far too pessimistic,” Bailey said.
Click here to access the Stuff report.
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