The New Zealand property market is performing strongly, with prices set to rise even further in 2020. The market has steadily picked up pace over the last few months, making it harder for many first-home buyers to save for a deposit. With property values rising and sales numbers increasing, there is increasing pressure in heated markets due to long-term lack of supply. According to Westpac's economists, we can expect 7% growth next year alone, with the market not yet hot but heating up by the minute.
According to the latest figures from the Real Estate Institute of New Zealand (REINZ), the national median price in September was up 2% for the quarter to $597,000. The Auckland market is also back on the way up, with similar 2% growth seeing the median price rise to $848,000. While Auckland is still a long way from the record high of $900,000 recorded in March of 2017, the national median value hit a new record with the round figure of $500,000.
According to REINZ chief executive Bindi Norwell, "September was a strong month pricewise, with record median prices recorded in four regions- Manuwatu/Wanganui, Southland, Taranaki and Hawke's Bay." The uneven numbers of recent months are still being felt on the ground, however, with three regions going against the grain with negative growth compared to September 2018: West Coast at -7.5%, Northland at -5.5%, and Nelson at -5.4%.
Along with stronger prices, sales volumes were also up in September on an annual basis. According to REINZ, there were 3.3% more sales nationwide last month, although significantly, there were also 7.3% more property listings. The combination of higher prices, more sales, and more listings has led to some rather optimistic commentary, even in a wider economic environment where both national growth and business confidence are down.
According to Westpac Chief Economist Dominick Stephens, "This data leaves us very comfortable with our long-held views... Our expectation remains that low interest rates will boost asset prices, including lifting house price inflation to 7% per annum. That will give a short term boost to consumer spending, which combined with the Government's loosening of the reins, will spark slightly higher rates of GDP growth next year than we have experienced this year."
If we see another strong month or two of solid housing market data, the RBA may have no choice but to start paying attention. According to Mr Stephens, "On monetary policy, the RBNZ would be more likely to conclude that it has lowered interest rates far enough - that's why we are forecasting one further OCR reduction and no more." Kiwibank senior economist Jeremy Couchman has a similar if slightly less optimistic forecast for the months ahead, saying "we expect aggregated price gains to pick up towards 5-6 per cent year-on-year in 2020."