This after nabbing second spot two years ago
New Zealand came in fourth from the bottom in Knight Frank’s Global House Price Index, just two years after being near the top during the housing boom.
Two years ago, New Zealand posted a price increase of 22.1% in the year to March 2021, earning the country its number-two spot in the index.
But in the second quarter of 2023, New Zealand slipped to 53rd place among 56 countries in the index, with house prices falling 9.1% over 12 months, slipping 2.9% over six months, and picking up by 1.3% over the quarter.
New Zealand only ranked higher than Finland, Sweden, and South Korea. South Korea placed last on the list with an annual price fall of 12.8%, although prices picked up by 2.3% in the three months.
Turkey ranked first in the index, recording a house price increase of 96% in a year, followed by Lithuania with 15.3%, Croatia and Greece with 14%, and North Macedonia with 12.9%.
Liam Bailey (pictured above), Knight Frank head of global research, said the shift to higher interest rates have impacted housing markets around the world, with the average annual growth rate across the 56 markets it tracks falling to 3% in the second quarter, down from a recent peak of 10.9% in the first quarter of 2022.
“Rising interest rates in most major economies since early 2022 have had a significant impact on prices, transaction volumes and market liquidity,” Bailey said. “Financial and credit conditions have tightened, borrowing rates have risen, and as a result, house price growth has moderated, and in many markets, turned negative.”
That said, Bailey said there were emerging signs of market conditions stabilising as peak interest rates approach
“Strong demographic trends in major markets, limited inventory of houses for sale, and significant delays to new build projects are all providing structural supports for pricing – especially in markets like Australia, the US and Canada – which have seen price growth of 2.9%, 3.7% and 6.1% over the past quarter,” Bailey said.
He also noted that along with the rapid approach of peak rates, housing market conditions have modestly improved in some key global markets.
“With the full effects of rate tightening still to be felt, a more substantial improvement in housing market liquidity and price growth is still some way off,” Bailey said.
Globally, the index saw a marginal lift in the annual rate of growth over the past quarter, from 2.9% to 3%, but Bailey warned against overstating the shift in housing market conditions.
“Even if policy rates are not raised further, the effects of past rises will continue to work their way through economies for some time,” he said.
Looking ahead, Bailey said that in the medium term. housing markets will likely be “dominated by low supply and strong demand which will add to upward pricing pressures from late 2024 and beyond.”
View the Global House Price Index - Q2 2023.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
