HOUSING CRISIS: NZ the second highest annual price growth in the WORLD

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PHOTO: NZ’s residential price growth rate is the second highest in the world. FILE

Australia and New Zealand are among the top 10 countries with the highest rate of annual residential property price growth, according to Knight Frank Research.

The pandemic-induced housing boom continues to amplify, with price growth rising by 9.2 per cent on average across 55 countries and territories in the year to June 2021.

Australia had the seventh highest annual price growth of 16.4 per cent, which was the nation’s highest rate since 2003.

It was preceded only by Turkey, which saw a 29.2 per cent increase. Meanwhile, New Zealand saw a 12-month percentage change of 25.9 per cent, the second highest rate in the world.

The Global House Price Index Q2 2021 showed the world’s developed economies averaged price growth of 12 per cent in the 12 months to June, double that seen in key developing markets (4.7 per cent).

Several key economies including the US (18.6 per cent), Canada (16 per cent) and Russia (14.4 per cent) also made the top 10.

The remaining places all went to European countries, including Slovakia (18.6 per cent), Sweden (17.2 per cent), Luxembourg (17 per cent) and the Netherlands (14.5 per cent).

In total, 18 markets registered double-digit price growth, up from 13 last quarter and seven a year ago.

Singapore and South Korea were the first Asian markets to rank on the list, both with a rate of 6.8 per cent.

Only two markets saw prices decline in the year to June 2021 – India and Spain. This is the lowest proportion of markets registering a decline in prices since the Global House Price Index commenced in 2008.

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Despite strong price growth there are signs of softening demand in some markets. In the US, mortgage applications have dipped and the share of households thinking now is a good time to buy hit a decade low of 28 per cent in June.

The prospect of interest rate rises in markets such as New Zealand, the US and the UK is also likely to weigh on buyer sentiment in the medium term.

But conversely, recent tighter restrictions in South East Asia, New Zealand and Australia may yet spark renewed activity as lockdowns shine a light on homes and lifestyles.