The Government has announced a plan to tackle the country's housing affordability crisis, getting council's to free up more land and making it easier and cheaper to build new homes.
The long-awaited housing plan is due to go before Cabinet tomorrow, to be signed off, seven months after the Productivity Commission released a report on housing affordability.
The soaring price of property has been blamed on a shortage of availability, and Finance Minister Bill English said the first step to fix it is simply to build more homes.
The housing shortage is pricing many potential homebuyers off the market, particularly in Auckland, where it's estimated 10,000 more new homes a year need to be built than are currently going up, to keep pace with population growth.
The average price of a house 20 years ago cost around four times the average income, now it is nearly double that.
English said affordability is a serious problem, but assured it doesn't have to stay that way.
"There's a real shortage of good quality lower-priced housing," he told TV ONE's Q+A programme this morning.
"For the lowest quartile incomes, there's really no new housing being produced, apart from what the government is building."
English warned that rising house prices are "dangerous" for the country.
"People just seemed to assume that no matter what happens, house prices are going to go up.
"That has turned out to be quite dangerous for New Zealand. So we don't accept that house prices automatically have to rise.
He proposed that one way to drive prices down was to increase the number of houses on the market.
"The thrust of it is to make it easier, both commercially and in the planning process, to enable more houses not just (on) greenfields, but also within the cities," he said.
Crucial to the reforms will be legal changes which help councils open up more suitable land, and reduce red tape around building consents.
This, however, has already made some councils wary.
"The last time we dropped standards in terms of materials we had a lot of leaky homes, and we can't afford to compromise on these building consent processes," said Porirua mayor, Nick Leggett.
ONE News Political Editor Corin Dann , who interviewed English on Q+A, said the minister is "very determined to try and stop run-away prices, and keep the Kiwi dream of home ownership alive".
Dann said tackling the housing market issue is a "a hornet's nest" for Government ministers.
"The problem for the Government is if it simply increases supply too much and we see a big drop in prices, it's going to upset an enormous number of New Zealanders who have billons and billons invested in housing," he said.
"If it does nothing it is also risky, because there are increasing numbers of young New Zealanders frustrated and angry about not being able to get that home-ownership that they want."
'Token tinkering'
Labour's Housing spokesperson Annette King says the Government appears set to disappoint New Zealanders by offering "token tinkering" in response to the housing affordability crisis.
"Bill English seems to think the housing affordability crisis can be solved by the usual National party hobbyhorses of weakening the Resource Management Act and lowering standards for property developers," King said in a statement.
"Such changes will only be tinkering around the edges for thousands of Kiwis. The Government clearly doesn't realise that the main problem is affordable housing for low and moderate income earners, who just can't find houses."
There is a tendency for new private sector-financed houses to be large and expensive, she said.
Home ownership and affordable housing rates have dropped dramatically from a peak of around 75% in the 1980s to 65% today, King said.
This has impacted on younger people, with nearly half the country's young people now in rental accommodation compared to 20% in the late 1980s,"another reason so many are leaving the country for good," she said.
King said it is time for a long-term housing policy, which includes "a real partnership with local government", starting by including housing as part of their core services.
What is needed is more houses in the $350,000 to $450,000 range built, quality and efficiency standards in rentals, more social housing and a capital gains tax to deter property speculation, King said.
New Zealands other large city, Christchurch, was destroyed by an earthquake last year. I would expect that might have created a bit of demand for premier Auckland real estate. But lets not let that event get in the way of a good housing ramp.
Quote:
New Zealand: Social crisis deepens following Christchurch earthquake
By Tom Peters 22 September 2012
The New Zealand city of Christchurch was hit by its first destructive earthquake in September 2010, and a second quake in February 2011 that killed 185 people. More than two years later, the city of 300,000, along with nearby communities such as Kaiapoi, are enduring a deepening social crisis for which the National Party government is directly responsible. Thousands of residents have left due to the destruction of houses and jobs, and many others are still living in damaged houses or in overcrowded conditions with friends or family.
Another, Chris, said: “I’m fed up with insurance companies who, thanks to our utterly spineless government, have been allowed to sit on their hands and act in bad faith... But most of all, I am fed up with the fact that we have politicians like Gerry Brownlee, who far from showing any contrition for the appalling lack of progress in [Christchurch], sees fit to hurl insults at the people who pay his wages.”
For those worst affected by the earthquakes, the government’s promises to rebuild Christchurch have amounted to nothing. On September 8, the Listener reported: “Of the 21,000-plus homes that have sustained more than [NZ]$100,000 of damage or are irreparable... fewer than 150 have been repaired or rebuilt. That’s less than 1 percent of the task.”
Negative gearing is a form of leveraged speculation in which a speculator borrows money to buy an asset, but the income generated by that asset does not cover the interest on the loan
A negative gearing strategy can only make a profit if the asset rises so much in price that the capital gain is more than the sum of the ongoing losses over the life of the speculation. http://en.wikipedia.org/wiki/Negative_gearing
House prices in Auckland, New Zealand, have reached a new record high with the average selling price in November increasing by more than $9,000 compared to the previous month.
Buyer demand is leading to record prices with the average reaching $627,721, according to the latest market report from Barfoot & Thompson.
‘In the past two months we have seen house values lift to a new high water mark. For much of this year the average price moved between $580,000 and $590,000 but with two consecutive months of trading at an average price well above $600,000, the entire pricing structure has lifted,’ said Peter Thompson, the firm’s managing director.
‘While we may see some easing of average prices during the Christmas/New Year period, during the prime summer trading months of February and March average prices are likely to return to the low $600,000s,’ he explained.
‘Telling signs that higher prices have become entrenched are the 146 homes that sold for in excess of $1 million, a quarter more than we have ever sold in one month previously, and that 43% of homes sold for less than $500,000, whereas on average the number is normally half,’ he added.
He pointed out that the driver that is causing homes values to increase so quickly is buyer demand and that has led to prices increasing across all price brackets.
‘In November we listed 1,769 properties, the highest number in one month for nearly five years, and combined with residual listing, there was a reasonable range of properties from which to choose,’ said Thompson.
‘Listing are being helped with a greater number of home owners making the decision to follow through with their future housing intentions now that higher prices are being achieved,’ he explained.
‘These buyers who are either trading up or down, combined with new arrivals or those looking for rental investments, were higher in number than available stock, and this led to keen buying, particularly at auctions,’ he added.
Overall sales numbers for the month at 1,124 were up 4% on those for October and up 25.7% on those for October last year. At the end of the month the firm had only 3,816 properties on its books, the lowest number at the end of November for more than 10 years.
A lack of houses in New Zealand's two biggest cities has driven up property values across the country and seen sale prices hit a new record.
Property values rose 1.9 percent in the three months ended November 30 and are 5.7 percent higher on an annual basis, government valuer Quotable Value says.
The figures come the same day Real Estate Institute of New Zealand data shows the median sale price rose 4.3 percent in November to a record $383,250 from a year earlier, and as sales volumes surged 24 percent to 7454.
"Housing turnover has picked up steadily over the past year, as confidence has returned to the housing market underpinned by expectations of low interest rates and gradually improving household confidence," ASB economist Jane Turner says in a note on the REINZ figures.
"Listings data suggest house sales may be constrained by low supply, particularly in Auckland. This implies that demand could be stronger than the level of turnover suggests," she says.
Last week the Reserve Bank flagged its wariness of the Auckland property market, which is starting to strengthen with cheaper bank funding costs leading to increased competition and lower mortgage rates.
That prompted the central bank to warn it may have to hike interest rates if property prices keep rising and lead to another housing bubble.
"Recent building activity figures show an increase in new housing construction in Canterbury and Auckland, which suggests supply is now responding to the increase in house prices and could help alleviate pricing pressures over the coming year," Ms Turner says.
The REINZ figures showed Auckland's median house price rose 1.9 percent from October to a new record median price of $540,000.
Auckland property values rose 3.2 percent on QV's rolling three-month basis and are up 9.3 percent from a year earlier, while Christchurch values advanced 2.2 percent in the quarter and were up 6.3 percent on the year.
Wellington property values increased 0.6 percent in the three months ended November 30 and were 1.7 percent ahead of the same time in 2011. Dunedin values rose 1.2 percent in the quarter and 3.7 percent on the year.
The REINZ Stratified House Price Index, which adjusts for the proportion of higher or lower-value homes sold, rose 7.3 percent from November 2011 to a record high 3544.4.
The national median days to sell fell to 32 to 33 days in October.
House prices in our major urban centres are rising faster than household incomes; Auckland in crisis; but still some cities where the median multiple is below three
Posted in Property January 21, 2013 By David Chaston
House prices are rising again. At the same time, concerns about "affordability" are also rising.
Today, Demographia has released its annual international study comparing 337 urban markets, and highlighting that most of New Zealand's major urban markets are significantly unaffordable. (see links below).
Housing affordability has now crossed over to being a full political issue. Parties are issuing policy statements, and some have the issue as their main talking point. Newspapers run front page stories about it because it drives sales.
Clearly people are concerned - especially first-home buyers and families who feel they need to live within a sensible commuting distance from their work. In some of our major urban centres, this is now pretty tough.
Solutions proposed fall into two types: demand-focussed or supply-focussed.
Demand-focussed 'solutions' aim to change the ability of potential home-buyers to afford what is available, to try and help them "get on the property ladder".
Among solutions suggested include making available easier borrowing terms, lower deposits, low or concessional interest rates. Housing NZ's Welcome Home Loan program is an example. Being able to use some of your KiwiSaver as part of a first home house deposit is another. Some people often think that 'intensification' means lower house prices because they think multiple units on a standard block of land lowers the land costs.
Supply-focussed 'solutions' aim to address the fact that rising demand is not being met with rising supply and consequently 'price' becomes the market way to ration the demand.
Reversing these pressures requires many actions that result in building enough houses to meet demand requirements, or slightly more so that the pressure on prices abates or reverses. Intensification can play a part in this, but regulation inhibits any meaningful chance that 'houses' will be built - more likely they will be flats, apartments, and other shared-living dwellings or communities.
The risk of building 'shoebox ghettos' rises when the goal is affordability without a significant release of land supply.
How to define affordability?
But how should we define affordability?
The main way is to relate dwelling prices to incomes.
The house-price-to-income multiple is a simplified, yet internationally recognised measure of housing affordability. It is covered in Agenda 21, Chapter 7 of the United Nations Framework and it is defined as the ratio between median house price and median annual household income, otherwise known as the median multiple. The World Bank also says this ratio is "possibly the most important summary measure of housing market performance, indicating not only the degree to which housing is affordable by the population, but also the presence of market distortions".
Housing is considered "affordable" when it can be purchased for less than three times annual household incomes. It is "moderately unaffordable" at between three and four times household incomes, is "seriously unaffordable" between four and five times household incomes, and "severely unaffordable" above five times annual household incomes.
Unfortunately for us, we live in a region where prices have skyrocketed due to the regulatory strangling of new house building. Sydney is familiar to many New Zealanders; it is 'local', 'real' and one of the world's most expensive cities in which to buy a home. We forget how much of an outlier Sydney and Melbourne are. And Auckland has joined that outlier club.
Based on our monitoring of prices and household incomes of the main house-buying demographic (30-35 year olds), there are now large parts of the residential belt in central Auckland where the median multiple is well over seven times, far above "severely unaffordable". Auckland's North Shore at almost at seven times, in Manukau its is rising in a worrying trend and has just touched six times, and out west in the Waitakere region of the city it is 5.5 times. All these are at record highs (that is record unaffordability) since we started monitoring median multiples in late 2001.
'Severely unaffordable'
Nationally, we are now back over five times and "severely unaffordable". The national record however was back in April 2007 and we are quickly getting back to that pressure.
In Christchurch, it is back up to 5.3 times, and close to its record high which was reached in 2007.
In Wellington City and in Porirua it is at a similar level of 5.3; it is about 4.5 on the Kapiti Coast, 4.2 in Lower Hutt and about four in Upper Hutt. In all these places it is "seriously unaffordable" to buy a house by international standards.
The places in New Zealand that are "affordable" and where you can find one for three times household income or less include Rotorua, Wanganui, and Invercargill.
Places with a median multiple between 3x and 4x include Whangarei, Gisborne, Hastings, Palmerston North, Timaru and Dunedin.
Caveat
This analysis uses the international standards, and there is one caveat that is worth mentioning. There have been a series of tax cuts in New Zealand designed to boost take-home pay. The effect of tax cuts are not accounted for in the "median multiple" calculation because under that standard it is "gross household income" that is related to house prices. This is a flaw in the median multiple approach. Our Roost Home Loan Affordability series overcomes that problem by focussing on individual and household "take home pay" (ie: after-tax income). The downside of the Roost home loan affordability measure is that it is not internationally comparable.
That parts of the New Zealand housing markets are under stress is unarguable and obvious for a growing number of buyers and families that need somewhere decent to live within reasonable distance from their employment.
Unfortunately, the situation has been developing since late 2002 - more than a decade - when the national median multiple was below 3.5 times. We are inured to the corrosive effects of unaffordable housing. If Auckland's median multiple fell from its present 7x to closer to 6x some official would declare victory. But it needs to return to the threes before a sustainable victory is claimed. That will require major actions mostly at the local level by local authority and city officials.
In Auckland where the severest issues are, little but platitudes are being expressed. There is certainly zero commitment to take meaningful action. Large landbankers help finance mayoral campaigns and high property values are required to justify rates for urban train ambitions. Besides, most politicians believe that they would pay with their jobs if the value of voters' "investment" in their houses fell.
It may be too much to expect that after a decade of inaction that has caused the crisis, there would be a sudden epiphany.
Tax-free capital gains for those that have them are a powerful drug.
Finance Minister Bill English has threatened the Government could take over the role of ensuring an adequate supply of land for housing, if local councils fail to do so.
His comments follow publication of the 9th Annual Demographia International Housing Affordability Survey which shows the median house price in Auckland is 6.7 times gross annual median household income in the city.
Demographia, which covers 337 urban markets in the United States, United Kingdom, Canada, Australia, New Zealand, Ireland and Hong Kong, considers markets to be severely unaffordable when the median multiple - where the median house price is divided by the gross annual median household income - is 5.1 and over.
Christchurch is at 6.6, Tauranga-Western Bay of Plenty at 5.9, Wellington at 5.4 and Dunedin at 5.1.
Three metropolitan areas considered by Demographia to be "seriously unaffordable" are Palmerston North at 4.4, Napier-Hastings at 4.5 and Hamilton at 4.7.
In an introduction to the Demographia report, English said land had been made artificially scarce by regulation that locked up land for development.
That regulation had made land supply unresponsive to demand.
When demand shocks happened, as they did in the mid-2000s, much of that shock translated to higher prices rather than more houses.
"It simply takes too long to make new land available for development," English said.
He was worried a repeat of the mid-2000s demand shock might be starting.
As interest rates stayed below historic norms, expectations were shifting that those rates were here to stay, he said.
"As a result, demand for real assets has increased, observed in booming equities markets in 2012," he said.
"Demand for real estate is also increasing, with the median house price in Auckland recently exceeding the highs of 2007."
English said there seemed to be increasing awareness around the world that the planning pendulum might have swung too far.
"Land use regulations and intrusive development rules have consequences," he said.
An important political driver of urban controls was environmentalism, but that concern was misguided, English said.
"Cities are environmentally friendly places if the alternative to city living is high-footprint lifestyle in the country," he said.
"New Zealand has seen a proliferation of 'lifestyle blocks' outside cities in the last 15 years, which may in part be an unintended consequence of raising the cost of urban living." Ad Feedback
On Radio NZ, English said the Government was focused on working with councils to get enough houses coming on to the market to meet demand.
Auckland Council was getting a "pretty clear message" from the Government, and from opposition parties "who've got plans which simply can't be executed unless they dramatically change the planning system", English said.
A new draft plan being produced by Auckland Council in March would be "an excellent opportunity to look at whether they have shifted their strategy to enable more housing".
Asked if the Government should take control of the land supply away from local government, English said: "That's a dramatic solution, and possible if the situation continues to get significantly worse, but, of course, government doesn't have the knowledge of the local circumstances in the way that councils have, and actually it doesn't have a mandate from local voters to make those decisions in entirety."
Labour has proposed building 100,000 basic homes for first-home buyers, focusing on Auckland, over 10 years.
Labour leader David Shearer said English's comment - that the planning system would have to be dramatically changed for opposition housing policy to go ahead - was "absolute nonsense".
He had seen affordable houses built for $300,000 to $350,000. Those included two to three-bedroom terraced houses with small backyards, while a stand-alone four to five-bedroom house would be "a bit more", and there could be savings with two-bedroom apartments.
If, instead of sniping at councils, the Government "actually went and talked to them, they would find out there is land available and they could get cracking on it", Shearer said.
City limits did not need to be expanded "straight away".
In its Auckland Plan, covering the area's growth for the next 30 years, the Auckland Council talked about "moving to a quality, compact Auckland".
It aimed to provide for 60 per cent to 70 per cent of total new dwellings inside the existing core urban area, with the remaining 30 per cent to 40 per cent of new dwellings in new greenfield sites, satellite towns, and rural and coastal towns.
Auckland deputy mayor Penny Hulse said the Demographia report was the "rhetoric we've been hearing for quite sometime".
"Their entire solution seems to be building houses on the fringe and putting people out there," she said.
But for people without much money the fringe was extremely expensive, without jobs, public transport, or community facilities nearby.
Also releasing land on the edges raised the question of who would pay for the necessary infrastructure.
English and the Demographia authors appeared to be listening to each other, rather than talking to councils, Hulse said.
Land was available now in Auckland for the building of about 15,000 houses.
Some land always needed to be available for growth. "What we don't agree with is the unplanned wholesale release of land which is going to cost the ratepayers a fortune to service," she said.
The unitary plan the council was working on now contained solutions to the issues English had raised. It would allow the building of more diverse, good quality homes in Auckland.
In parts of Auckland the building of new, stand alone houses costing $300,000 was "absolutely achievable", Hulse said.
A problem for the council was that because of changes the Government had made to the Resource Management Act, the council would not be able to use the unitary plan until all appeals and the rest of the legal process had been dealt with, which was not expected until 2016.
The council wanted the Government to allow it to introduce the unitary plan under the previous RMA rules, which would mean the plan would influence decisions once it was notified, which was due to happen in September.
Latest figures from QV show that house prices rose during the past year by 8 per cent to 9 per cent in North Shore, Waitakere and Manukau areas, while in the former Auckland City Council area they were up 11 per cent. Across most of Auckland values were well above the previous market peak of 2007, with the former Auckland city area up 14.7 per cent. When adjusted for inflation, values in the former Auckland city were equal to the 2007 peak.
The latest monthly property value index shows that nationwide residential values increased further in April. Values are up 4.0% above the previous market peak of late 2007, with a 1.3% increase over the past three months and a 7.1% increase over the past year.
Kerry Stewart, QV Operations Manager said “the increase in nationwide values is now being driven by all the main centres, not just Auckland and Canterbury. The value increases in the other main centres is much slower than in Auckland and Canterbury, but the trend is definitely positive. The provincial centres remain more variable.”
“Buyers are showing more optimism and confidence, although are still being careful in their decision making. The exception to this is in parts of Auckland where demand is so high that there is little opportunity to delay making offers.” said Stewart
Main Urban Areas Commentary
NOTE: On the urban graph, we have added the New Zealand Price Index line (shown in light blue) to provide a comparison between that area and New Zealand overall. Auckland
Values across Auckland have continued to increase and are now up 12.0% over the past year. Rodney and old Auckland City still show the slower rates of growth over the past 3 months in comparison to other areas. Old Auckland City for example has seen a 1.7% increase over the past 3 months where as other areas are increasing by 2-3%. Waitakere has seen the highest increase at 3.4%. Overall, values are still markedly above last year, with North Shore, old Auckland City, Waitakere and Manukau all around the 12% mark.
QV Operations Manager Kerry Stewart said “with the continued surplus of buyers and lack of properties on the market to meet the demand prices are still increasing. We have seen instances of some properties selling for hundreds of thousands of dollars above their Rating Value.”
“As a result, buyers are broadening their property search to areas away from desirable suburbs and looking more at the fringe of the city. Again, this is causing prices to increase rapidly with areas such as Blockhouse Bay and New Lyn achieving prices previously unseen for years,” said Stewart.
“Even properties in the higher end of the market, in excess of $4 million, have been selling extremely well lately with over 50 properties sold in this range in the last 12 months,” said Stewart.
Hamilton and Tauranga
Outside of Auckland, the main cities are still increasing. There is renewed confidence in areas such as Tauranga, where growth has been limited in comparison to other major cities like Auckland and even Hamilton. As a result, Tauranga has grown 1.2% over the past 3 months, with Hamilton seeing only a slight increase on that at 1.7%. Tauranga remains only 0.8% above this time last year however in comparison to Hamilton's growth of 4.9%.
QV Valuer Paul Thomas said “there is a growing feeling of confidence in Tauranga following a strong month of sales and plenty of interested buyers. There are some indications that Aucklander's are moving down to the city to work, something that has been notably absent for the past few years. This may help the market lift even further.”
QV Valuer Richard Allen reiterated this optimism by saying “sales are ticking over well with enough demand in the market. The drought especially doesn't appear to have had any negative impact at this stage. Hamilton could also reap the benefits of some proposed developments in the dairy industry nearby.”
Wellington
Values in the Wellington area are showing some growth, although not like the other large cities of Auckland and Christchurch. Values are now 2.0% above this time last year with a 0.8% growth in the last 3 months. Within Wellington, Porirua has seen the biggest increase over the last 3 months at 2.2%.
QV Valuer Kerry Buckeridge said “buyers in the $1-1.5 million bracket as well as first home buyers remain active in the market with attractive, well presented properties attracting multiple offers and selling well. There are quite a few apartments on the market but with insurance increases affecting body corporate fees still, sales aren't as prolific in many buildings.”
Christchurch and Dunedin
Christchurch values also continue to increase, now 9.4% above last year. The outlying areas such as Waimakariri and Selwyn continue have continued to show slowing growth rates, although are still significantly above last year also at 6.5% and 13.2% respectively.
QV Valuer Daryl Taggart said “good sales are continuing with buyers seemingly determined to get the house at any price, especially if they have been searching for a while. We are also seeing sales increase in the hill suburbs with stigma perhaps starting to decrease about these areas.”
Dunedin has also seen another steady increase with it now up 1.1% increase over the past 3 months, and 4.8% up on last year.
QV Valuer Tim Gibson said “the normal winter slowdown hasn't taken affect yet with sales volumes good. There does appear to be a lack of properties however across most of the market, meaning any well presented properties, especially in sought after locations, are sold quickly and usually with multiple offers.”
Provincial centres
The provincial centres are fluctuating but generally the market remains stable with the main areas continuing to grow. Areas such as Hawke's Bay and Wairarapa are witnessing some optimism as per other areas of the country but buyers remain cautious and are still taking their time. Even areas like Whangerei, which has previously been declining, have experienced a slight increase of 0.2% over the past 3 months.
Sept. 9 (BusinessDesk) - Rising New Zealand property values accelerated last month as the lack of listings in Canterbury and Auckland continue to overheat the market, prompting the Reserve Bank to impose low-equity home lending restrictions from next month.
Property values rose at an annual pace of 8.5 percent in August, from an 8.1 percent annual pace a month earlier, according to state-owned Quotable Value. House values rose 2.9 percent in the three months ended Aug. 31, slowing from the 3.1 percent rolling three-monthly pace ending in July.
"Auckland and Canterbury are still driving the national increase in values, with the other main cities seeing limited growth," QV research director Jonno Ingerson said in a statement.
Auckland property values rose 3.3 percent on a rolling three-month basis and were up 13 percent on an annual basis, while Christchurch values were up 2.7 percent on a three-month basis, and 11 percent on the year.
The rapid lift in house prices in the country's two biggest cities raised fears of an asset bubble emerging, and prompted the Reserve Bank to impose restrictions on high loan-to-value ratio lending from next month.
QV's Ingerson is sceptical the plan will succeed in taking the heat out of the market, saying the lack of supply was the main cause of the increase.
"While the LVR limits may have some dampening effect on values, we should still expect them to increase for some time yet," Ingerson said.
Wellington property values rose 0.4 percent in the three-month period, and were up 2.9 percent on an annual basis. Dunedin values increased 0.3 percent over the three-month period, and were up 3.4 percent annually.
After peaking in November 2007, New Zealand nominal property values fell 11% from the 2007 peak to the 2009 trough, then rose for the next few years to be currently back up to 2007 peak values. Australian property values peaked several years later in mid 2010, and are still down 5% from peak.
House Price Growth
For the past four months, Australia has been experiencing a resumption in house price growth, but without an associated recovery in the rate of housing credit growth, or housing finance commitments. A similar phenomenon was also experienced early in the recent NZ housing growth cycle, where a lower volume of housing credit chased an even lower volume of housing transactions, resulting in an increase in average NZ mortgage sizes and rising NZ house prices. However, since 2011, mortgage demand actually accelerated in NZ, with the volume of mortgage approvals rising by around 50% and the value of approvals rising by around 85%. Average NZ mortgage sizes are up almost 20% and house prices are up another 7%. This suggests that in NZ, the early slow growth phase may have fed on itself, a virtuous circle whereby potential buyers noticed the rising prices (on low volumes), woke up to the fact that house prices were on the move again, and flocked back into the market on the back of low interest rates.
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