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Growing Concern Over High Property Prices In New Zealand

News Posted On: 29 August 2012

It's a problem that would currently be welcomed by many countries, but New Zealand is concerned over rising property prices and feels those who can afford a home may be forced to spend much of their income doing so, while those who are unable to afford a home may consider moving overseas.

The median house price in New Zealand has hit an all-time high of NZ$372,000 which is 6% more than before the global financial crisis, and is more than double compared to a decade ago. This median price is now around five times the median household income, and in Auckland median prices are around NZ$500,000, nearly 10 times the average annual wage of NZ$53,000.

It might seem strange that property prices are as high, as the country has a population of just 4.4 million. Moreover a lot of the property is lacking in proper central heating or insulation. In spite of this New Zealanders have a strong tradition of wanting to own their own home with a large garden, and many have chosen to invest in property rather than in stocks or other financial assets.

Increasingly high property prices have forced more people to rent, and since the early 1990s homeownership levels have dropped from 75% to just 65%.

Household debt levels are also considered to be high by international standards, but in spite of this the country is in relatively good economic health. Demand for the country's agricultural exports has remained high throughout the global economic downturn, and unemployment levels have remained low in comparison with most developed nations.

Most experts think a property crash is unlikely, and some are predicting that prices will continue to rise, especially in Auckland. The government certainly isn't worried enough to intervene to try to cool the housing market through tightening restrictions on mortgages.

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