New Zealand real estate industry - Statistics & Facts
New Zealand’s real estate industry is dynamic and diverse, ranging from residential and commercial property to lifestyle blocks and rural farms. Housing demand in the residential market is expected to continue to rise, with urban centers becoming even more populated. Nevertheless, the dream of home ownership has been discarded for many in the country, with high property prices limiting the home ownership rate. In recent years, the rapidly rising costs of residential property have initiated a change in property law – specifically relating to foreign buying of homes. Commercial property is generally rented, making this segment a significant investment market in the country. The office segment leads this market in terms of sales and property transfers. The construction sector has been booming, and new buildings are subject to stricter building regulations to ensure the quality of dwellings is continually improved. Housing affordability has become an important issue across the country. With house prices rising disproportionally compared to incomes, many believe New Zealand is in a property bubble. The home ownership rate was at its lowest level since 1951, partly due to rising house prices across the country. New Zealand has one of the highest house price-to-income ratios in the world, as well as the highest house price compared to rent.
In an attempt to tackle the affordability problem, in 2018, the New Zealand government passed legislation that would only allow New Zealand residents, Australians, and Singaporeans to buy homes in the country, restricting residential property buying by foreign investors. In 2019, the majority of residential mortgage lending went to owner-occupiers where the property was not their first home, indicating New Zealanders were investing in multiple homes, or upgrading or downgrading their existing dwelling. Commercial properties in New Zealand are widely available, with supply continually being built. The market includes office, retail, accommodation, mixed-use, and industrial buildings. Commercial property can be purchased with tenants and leases already present – in the second half of 2019, most purchasers of commercial property were investors. While most of this investment was from local buyers, overseas investors also made a significant contribution. Buyers from overseas were mainly based in Hong Kong and China. Residential housing quality has been a prevalent issue in recent times. According to homeowners, homes in New Zealand were always damp and cold, which can lead to various health-related issues. While renters generally found their accommodation to be suitable, many reported housing quality issues such as the presence of mold. Newer buildings are now subject to stricter building codes compared to existing homes.
New Zealand real estate industry - Statistics & Facts
Average residential house price in Auckland, New Zealand in June 2019, by district
The price of residential property in Auckland, New Zealand was the highest in North Shore City in June 2019, with an average sale price of over one million New Zealand dollars. In the same month, the regional median house price was 850 thousand New Zealand dollars across Auckland.
Rising housing costs
The average sale price of residential property in Auckland has been increasing for the past several years. While housing affordability has improved slightly as the median house price has begun to stabilize, Auckland still has one of the least affordable housing markets among the developed world. The average weekly rent in the city has also continued to increase, with the Auckland region having the highest mean rent for residential housing across the country.
Residential housing construction
The number of building consents granted for new homes in the region has increased year-on year. Nevertheless, the region is still experiencing a large housing shortage. With an increase in the rate of homes being built, and the city’s population growth rate expected to decline, Auckland’s housing supply might start to align with demand.
Distribution of commercial property sales in New Zealand in 2nd half 2019, by vendor purpose type
In the second half of 2019, vendors who were investors accounted for almost 57 percent of the commercial property sales in New Zealand. In the same period, owner-occupier vendors represented just 11.2 percent of the sales volume.
Average residential house price in New Zealand in June 2019, by region
The price of residential property in New Zealand was the highest in the Auckland region in June 2019, with an average sale price of 850 thousand New Zealand dollars. The most populated city in the country, Auckland has consistently reported higher house prices compared to most other regions. Buying property in New Zealand, particularly in its major cities, is expensive. The nation has one of the highest house-price-to-income ratios in the world.
Auckland residential market
The residential housing market in Auckland is competitive. While prices had previously been on the rise, the Auckland region experienced no annual change in the average residential house price compared to the same month in the previous year as of June 2019. The price of residential property in Auckland was the highest in North Shore City in that same month, with an average sale price of over one million New Zealand dollars.
Due to the rising cost of real estate, an increasing number of New Zealanders who want to own their own property are taking on mortgages. Most residential mortgage lending in New Zealand went to owner-occupier borrowers, followed by first homebuyers. In addition to mortgage lending, under the KiwiSaver HomeStart initiative, first-home buyers in New Zealand can apply to withdraw all or part of their KiwiSaver retirement savings to assist with purchasing a first home. However, even with a large initial deposit, it may take decades for many borrowers to pay off their mortgage.