The property market in New Zealand has experienced a hectic 2021 – but what lies ahead in 2022?
An intense 2021
Like many countries around the world, including the UK, house prices in New Zealand surged this year. This was due to a lack of listings and an increase in demand, with many Kiwis returning home from abroad due to the pandemic. Many were coming home with savings and were willing to spend more on a house with plenty of space since they would be spending more time at home.
The national median house price in November was up by 23.8% to $925,000, compared with $747,000 last year.
However, there are signs that the market is slowing down as more listings become available.
Wellington second in the world for growing house prices
Wellington was ranked second in the world for house price growth in the latest Knight Frank Global Residential Cities Index. This is a global comparison of housing markets in 150 major cities.
The median sales price in Wellington jumped 33.55% to $1.1 million in the third quarter of this year, coming second only to Izmir, in Turkey. Auckland was behind in 25th place.
The report, however, only covers house prices in the city itself and isn’t reflective of the surrounding area, such as the wider region of Hutt and Petone. Knight Frank has cited government stimulus, savings accrued during lockdowns, a reassessment of lifestyles and low interest rates as reasons for the surge in prices.
A new law for new homes
Two political parties in New Zealand recently passed a law that aims to supply new homes a policy that aims to boost housing supply by forcing councils to loosen restrictions on building in urban areas, in the hope that this will bring down property prices.
Planning law in New Zealand has been blamed for slowing down housing development. Consent from the local council is required for multiple dwellings to be built and this can be rejected for small reasons such as a complaint from a neighbour.
The law is designed to scrap some of these restrictions and councils will be obligated to allow up to three three-storey houses on most sites in the country’s major cities.
A buyer’s market in 2022?
According to property data company CoreLogic, the market has started to slow, and an expected surge of new property listings could result in a buyer’s market in New Zealand in 2022.
The report says, “More choice for purchasers can only mean reduced price pressures in due course, and a switch to a buyer’s market later in 2022 is firmly on the cards, albeit they’ll have to work harder to get the finance in the first place.”