New Zealand house prices launch for the stars

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By Leith van Onselen

New Zealand house prices surged again in May, with the national stratified median price hitting a new record $415,325, led by New Zealand’s biggest city – Auckland – where prices rose to a record $607,600 (see next chart).

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Auckland’s impact on the recent house price boom is clearly evident by the next chart, which shows prices there easily eclipsing the national average. Prices in Christchurch – New Zealand’s second biggest city – have also risen at a faster than average pace, whereas Wellington – New Zealand’s capital and third biggest city – has lagged the national average (see next chart).

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House price growth remains strong (see next chart). Nationally, house prices rose by 8.7% in the year to May 2013 to be 9% above their November 2007 peak. Prices in New Zealand’s largest city, Auckland, surged by 14.8% in the year to May 2013 to be 19% above their July 2007 peak. This was followed by New Zealand’s second biggest city, Christchurch, where prices rose by 13.1% over the year to be 12.3% above peak. Finally, prices in the capital, Wellington, rose by 5.2% in the year to April but were 1.6% below their September 2007 peak.

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Clearly, New Zealand’s National Government needs to speed-up supply side reforms, particularly in Auckland and Christchurch, whereas the RBNZ needs to get cracking in implementing its macro-prudential restrictions on high loan-to-value mortgage lending.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.