For 2020, prices jumped nearly 20%.
What happened. House price growth in New Zealand continues to accelerate, helped by ultra-low interest rates, which have reached an all-time low of 0.25%, as well as limited supply. On average, property in the country has risen in price by 16.77% over the course of 2020, up significantly from 10.28% in 2019. And, according to CoreLogic, there is no end in sight to this trend. From the third quarter to the fourth quarter, prices increased 7.62%.
Supply and demand. Despite the pandemic and subsequent blockages, interest in local real estate remains very high. According to REINZ (Real Estate Institute of New Zealand), home sales in the country rose 36.6% to 8,935 units in the year to December 2020. In Auckland, the figure was 66% (to 3,219 units).
Limited supply is putting further pressure on prices. In December 2020, the number of properties available for sale fell 29.1% year-on-year to 12,932 units. That’s the lowest level of inventory since record-keeping began.
Growth in construction activity is slowing, with new building permits increasing by less than 3% in the first eleven months of 2020. This is significantly less than the average annual growth of 14% over the past eight years, according to Statistics New Zealand.
Rent. Apartments in Auckland cost around $7,209 per square meter. To buy a spacious apartment of 120 sq.m. in the city center, you will have to pay about $412,571, and to rent such housing can be for $1,885 per month. The yield is 5.48% per annum.
Situation. The International Monetary Fund (IMF) estimates that New Zealand’s economy shrinks by 6.1% in 2020 due to blockages and travel restrictions related to the COVID-19 pandemic. This contrasts with solid economic performance over the past decade, with growth of 2.2% in 2019, 3.2% in 2018 , 3.8% in 2017 and 4.2% in 2016.
According to IMF forecasts, the economy is expected to recover by 4.4% this year.
