House prices were up by almost 12% during the year to Q2 2022

New Zealand’s house price growth continues strong, despite falling demand caused by rising borrowing costs. Median house prices rose by 11.99% (inflation-adjusted) in Q2 2022 from a year earlier, a sharp improvement from a meager y-o-y growth of 0.93% in the previous quarter but still far lower than the 23.57% increase seen in Q2 2021. On a quarterly basis, real house prices dropped 2.93% in Q2 2022. 

Demand is falling sharply

In July 2022, residential property sales across New Zealand plunged 36.7% y-o-y to 4,678 units, amidst the combined effects of rising interest rates, high inflation, the recent changes to the Credit Contracts and Consumer Finance Act (CCCFA) lending rules, as well as the significant increase in the number of available stock in the market, according to the Real Estate Institute of New Zealand (REINZ).

Regions that saw the biggest annual decline in sales in July 2022 included the West Coast (-54.9%), Auckland (-48.7%), Northland (-44%) and Waikato (-43.5%).

Inventory is rising rapidly. In July 2022, the total number of properties available for sale nationally increased by a huge 107.8% to 26,358 units from just 12,684 units a year earlier. All regions recorded 50% or more annual increase in inventory in July 2022 as compared to the same month last year.

Rents, rental yields: Good yields at 5.48%

Apartment costs in Auckland are around $7,209 per sq. m. 

New Zealand: typical city centre apartment buying price, monthly rent (120 sq. m)
  Buying price Rate per month Yield
Auckland $412,571 $1,885 5.48%

Recent news: New Zealand’s economy expanded by 5.6% in 2021 from a year earlier, marking a full recovery from the prior year’s 2.1% contraction due to the Covid-19 pandemic. The economy has been growing robustly in the past decade, registering an annual average growth of almost 3% from 2010 to 2019. The International Monetary Fund (IMF) expects the NZ economy to grow by a modest 2.7% this year.

In July 2022, the Reserve Bank of New Zealand (RBNZ) raised its Official Cash Rate (OCR) further by 50 basis points to 3.0%, its seventh consecutive rate hike since October 2021 and now the highest level in seven years, in an effort to rein in inflationary pressures.