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Australasia one single housing market

Housing markets across New Zealand and Australia conform to a price trend and share drivers, new research asserts.

Tuesday, March 29th 2016, 12:00AM

by Miriam Bell

The hot housing markets of Sydney, Melbourne and Auckland might seem a world away from the more subdued markets of Canberra, Hobart and Palmerston North.

Not only has growth in those big city markets over the past year or so been supercharged, which has led to some eye-popping prices, but they sit in major business and economic centres.

This is in stark comparison to the markets in the smaller centres, which have seen much slower growth and more constrained conditions.

Yet a new study from Motu Economic and Public Policy Research Trust, which looked at houses prices in sixteen cities in Australia and New Zealand, has found they are all part of a single housing market.

Motu senior fellow Arthur Grimes said they found that all sixteen cities share a price trend and are influenced by the same long-term factors.

“Of course, temporary ‘shocks’ such as an influx of migrants have an effect, but these wear off over a period of time.

“This means the major cities in Australasia share a weak form of a single housing market.”

A weak form single housing market means that house prices are affected by a single price trend – although different cities might react in differing degrees to this trend.

Differing reactions to the overall trend are likely to reflect either geographical or planning constraints, Grimes said.

“Such constraints can affect how much land is available and therefore how land prices respond to migration.”

However, when it came to price dynamics, the study revealed a more differentiated pattern – which made for three distinct city groups.

These were leaders (Melbourne, Sydney, Adelaide, Canberra, Brisbane); followers (Perth, Hobart, Wellington, Auckland, Darwin); and laggards (Dunedin, Christchurch, Palmerston North, Hastings, Tauranga, Hamilton).

All leader cities are within Australia and all laggards are within New Zealand, while the (mid-group) followers comprise a mix of Australian and New Zealand cities.

This means that the effects of any shocks are first experienced in the major Australian cities.

They then impact on the more peripheral Australian cities plus Auckland and Wellington and, finally, they flow through to the more peripheral New Zealand cities.

The study’s findings also have implications for macroeconomic policy, Grimes said.

“We found little evidence that monetary policy is effective in determining long-run real house prices.

“This means governments need to look at areas other than macroeconomic policy if they are interested in controlling house prices.”

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

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