The New Zealand Treasury is predicting New Zealand house prices to soar by an average of 18.3 per cent in the next four years.
The predicted rise would add around $125,000 to the average New Zealand house price, though in Auckland that figure is even higher, adding about $190,00 to the average house value of $1.03 million.
Stricter rules around foreign ownership by overseas property investors and loan to value ratios (LVR) have helped slow growth in recent years. But in the recent Wellbeing Budget, Treasury forecast a return to large increases over the next four years.
New Zealand house values in some regional parts are already booming – the latest Real Estate Institute report revealed a new record median price in Gisborne, which recorded a staggering 54.4 per cent year-on-year rise to $440,000 up from $285,000 last May. That’s a $155,000 increase, or $2645 a day.
Median house prices across New Zealand increased by 3.2 per cent in May to $578,000, up from $560,000 in May 2018 – and are even stronger once Auckland is excluded, increasing by 7.2 per cent to $487,770 up from $455,000 in May last year
Bindi Norwell, chief executive of the Real Estate Institute of New Zealand (REINZ), said the Treasury forecast was not unreasonable.
She said the economy was good and despite it being difficult to get funding from the bank, interest rates were low.
With Capital gains tax off the table, people were probably continuing with their purchases, especially investors, she said.
Senior property economist at property data provider CoreLogic, Kelvin Davidson, said if Treasury’s forecast was correct, it would reflect growth in regional New Zealand property.
He said that the regions were still outperforming many of the larger centres. Some of that growth is attributed to an exodus of Aucklanders to cheaper locations.
Economist Benje Patterson said two thirds of the exodus were to Northland, Waikato and Bay of Plenty, he said after publishing a report on the topic.
Aucklanders heading to the regions caused an increase in regional New Zealand house prices, but they would also be spending money and adding to the local economy.
It seems that New Zealand house prices are once again on the up, especially in the outer regions.