The New Zealand house market is ripe to mimic the crumbling of houses prices in major Australia cities, an expert from an Australian property research firm said today.
Wednesday, May 26th 2004, 6:04AM
by The Landlord
Sydney house prices, which had doubled over a period of five years, crumbled 7.5 percent in the first quarter of this year and Melbourne prices plunged a "nasty 12.9%.
In comparison, NZ prices have risen 42% over the last five years with Auckland prices up 40% and Wellington prices up 44%.
Louis Christopher, head of market research at Australian Property Monitors, said prices over the Tasman could easily fall by 15-20% from their peak if the Reserve Bank of Australia did not relent on interest rates later this year.
He said the auction clearance rate (the percentage of houses that actually sell under the hammer at auctions) is close to record lows experienced a couple of years after the 1987 share market crash.
"The New Zealand housing market has also experienced a boom similar to what occurred in Australia and it's a little bit more than coincidence that that has happened," he said.
Similar booms had occurred since the end of 2000 in Britain, the United States and other industrialised countries. The decline in global interest rates and the fallout from the collapse of the dot.com bubble fuelled the housing boom.
"Going forward there is a good chance that we might see a global decline in housing prices as global interest rates move up."
