Economists pick when the ‘turbo-charged’ New Zealand housing market will stall

The last time the country exited a strict lockdown, property prices exploded – but that’s unlikely to happen a second time, experts say.

On Monday, property market analysts CoreLogic reported of 983 suburbs across New Zealand, 771 of them saw median values go up $100,000 in just 12 months. Values in Auckland’s Ponsonby rose nearly $600,000 and Herne Bay $450,000.

Independent economist Cameron Bagrie told The AM Show on Tuesday the top 15 or so areas saw “turbo-charged” increases.

“You’re basically talking about Queenstown and a whole lot of expensive Auckland suburbs. If you rank the numbers a little bit differently – by the percentage movement within the value of the house – then you go into areas such as Pahiatua, Ruapehu District, a couple of suburbs in Whanganui. So you can tell two different stories depending on what sort of statistics you look at.”

“If anything it’s the more provincial markets that have the suburbs that have seen the biggest percentage rises,” said Kelvin Davidson, chief property economist at CoreLogic.

“In dollar terms of course when you start from a higher level, suburbs like Ponsonby and Remuera… the percentage gain in those expensive suburbs translates into a bigger dollar increase.”

But the vast majority of winners from the seemingly unstoppable rise in property prices are investors, he said – not necessarily homeowners.

“For investors of course a big rise in capital values can be crystalised – they can sell, that’s a genuine capital gain they can cash. For owner-occupiers, sure it’s good on paper… but it’s only on paper until you sell,” said Davidson.