What’s going on with the New Zealand property market?


Over the past years, New Zealand has been known for its surging property prices. Despite efforts from the government to address the issue, it continues to be a growing concern for both potential buyers and renters. The increase in price means that Kiwis have had to search for more economic solutions. In this article we will unpack what’s going on, and what’s being done to find a solution. 

Increasing demand for property is driving the prices up.

One of the main reasons behind the housing market boom is the increasing demand for property, particularly in the major cities such as Auckland and Wellington. The country has experienced a significant increase in population over the past decade, with a growing number of people seeking to move to urban centers. This has led to a shortage of housing supply, which in turn has driven up prices. You can check out the prices regularly on websites like Rentola, which allow you to see in situ what’s going on. It also permits filtering per location, which will confirm said price rises in urban areas as well as rural.

Historically low interest also has a knock-on effect.

Another factor contributing to the current housing market situation in New Zealand is the historically low interest rates. Banks have been offering mortgages at very low interest rates, making it easier for people to afford homes. This has led to an influx of investors and speculators, further exacerbating the housing shortage and driving up prices.

What has the government done?

The government has implemented several policies aimed at addressing the housing crisis, but their effectiveness has been limited. One of the main initiatives is the KiwiBuild program, which aims to build 100,000 affordable homes for first-time buyers over the next decade. However, the program has been plagued with issues, with many homes being too expensive or in the wrong locations. Additionally, the program has failed to keep up with the rapidly rising demand for housing.

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Another government policy aimed at addressing the housing crisis is the introduction of a foreign buyer ban. This means that non-residents and non-citizens are no longer able to purchase existing residential properties in New Zealand. The aim is to reduce demand from overseas buyers, who were seen as contributing to the rapid price growth in the market. However, critics argue that the policy has not been effective in reducing prices and has only served to further limit supply.

How has this affected renters?

The high cost of housing in New Zealand has also had a significant impact on renters. The rental market has become increasingly unaffordable, with many people struggling to find suitable housing within their budget. This has led to a rise in homelessness, with many people unable to afford the high rents or to find available housing.

The current housing market situation has also led to a rise in inequality. The cost of housing is often seen as a key driver of economic inequality, as it can limit people’s ability to access education, healthcare, and other essential services. It also exacerbates existing social inequalities, with marginalized communities and low-income earners being disproportionately affected.


What can be done to address the current housing crisis in New Zealand? 

One potential solution is to build more affordable houses. This can be done by relaxing regulations and making it easier for developers to build new homes. Additionally, the government could provide incentives for builders to construct more affordable housing.

Another solution is to implement policies that discourage speculation and limit the influence of investors. This could include measures such as higher taxes on property speculation or tighter lending restrictions for investors. The government could also consider implementing rent control measures to help make housing more affordable for renters.

Finally, there is a need for greater investment in social housing. This would provide affordable housing options for those who are struggling to find suitable accommodation in the private market. It would also help to alleviate some of the pressure on the rental market and reduce the number of homeless people in the country.


Has there been any recent improvements and are they here to stay?

With all this being said, there have been some reports of the market experiencing a sustained period of price increases recently, there have been some signs of cooling. In particular, there have been some recent drops in property prices in certain regions, including Auckland. There’s a few reasons for this, mainly the new policies put into place, limiting speculation and it’s important to factor in the effects of the pandemic too. 

To sum up, the current housing market situation in New Zealand is a complex issue with no easy solution. It is clear that the government needs to take action to address the crisis and provide affordable housing options for all New Zealanders. While there are no quick fixes, a combination of increased supply, policies to discourage speculation and support for social housing could help to alleviate some of the pressures in the market.