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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).
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).
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.
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.