Think we have it bad here in Australia, with our insane property price growth and record-low interest rates?
Well, spare a thought for our Kiwi neighbors who have the 3rd highest property price gain he in world! Sitting behind Los Angeles at number 2, and Montreal taking the top spot.
Whilst Sydney is number 8, Perth at 9, Brisbane just out of the top 10, at 11 and Melbourne in 14th place.
ANZ NZ chief economist, Sharon Zollner, said that much like Australia’s low mortgage rates and low supply and high demand, have pushed many Kiwi’s out of the market with many wanting to come to Australia to buy.
“House prices are up nearly 30 per cent [over the year] we just don’t think they can go much higher – they can’t maintain that pace at least – because they’re now completely out of whack with incomes,” Ms. Zollner said.
“People are borrowing too much money at the moment … it would be better to cool demand down a little bit now,” she added.
Affordability constraints are also biting in Australia. While fixed-rate mortgage rates are starting to rise, the Reserve Bank of Australia still does not expect to lift the cash rate until 2024.
PRD Real Estate chief economist Diaswati Mardiasmo said in Australia and around the world, low rates – which enabled cheaper borrowing and reduced the appeal of leaving savings in a bank – stimulus packages and a change in spending habits had pushed more people into the housing market. At the same time, supply chain pressures for the residential construction industry had slowed the delivery of new homes.
“If you combine all of those ingredients together, it results in property markets around the world going up by numbers that people were not expecting,” she said.
“Our Australian forecast for 2022 is for price growth to continue at more moderate rates. The same factors that have been supporting demand over the past year and a half are still prevalent, most notably cheap mortgages and a fear of missing out. On the other hand, an increase in supply and buyer fatigue will likely reduce the rate at which prices climb.”
The report noted that Chinese demand for Australian real estate was expected to grow modestly in the year to come, with pent-up demand likely to flow through when borders reopen. Further upward price pressure would result as inbound migration resumes.