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Biggest housing boom in 17 years

According to ASB economists New Zealand is in its biggest housing boom for 17 years, following the latest strong market data. 

Tuesday, February 16th 2021, 5:21PM

Figures from the Real Estate Institute of New Zealand revealed that nationwide house price inflation lifted to an annual pace of 19.2% in January, a high last seen in 2004.

ASB described the data as "jaw-dropping".

Wellington house price inflation rose by 26% year-on-year, Gisborne/Hawke's Bay rose by 30.7%, while prices increased by 22.1% in the Bay of Plenty.

In Manawatū-Whanganui houses rose by 26%, while Taranaki saw a 20.5% boost.

ASB said the soaring prices were driven by falling rates and "extraordinarily tight supply. We’ve been noting for some months that sales/new listing ratios, our preferred measure of housing market 'tightness', have been pointing to further acceleration in house prices rather than any signs that the market was about to slow down," the bank added.

Mike Jones, senior economist at ASB, expects the Reserve Bank's new LVR changes to cool the market in the coming months, and believes a construction boom will further slow house price inflation by the end of the year.

ASB expects prices to rise by 10% in total this year. 

Dominick Stephens of Westpac has forecast a 17% rise in nationwide house prices this year.

But Stephens expects prices will start to drop in three years time, as the official cash rate begins to rise following record low years.

"We believe that mortgage rates have reached their lows for this cycle, with long-term interest rates now starting to head higher as global economic sentiment improves.

"The impact will become greater as the prospect of OCR hikes draws closer; we expect house price inflation to turn negative by 2024," Stephens said.

Tags: ASB house prices housing market Westpac

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 6.35 5.25 5.45 5.99
ANZ 6.34 5.59 6.05 6.29
ANZ Blueprint to Build - - - -
ANZ Special - 4.99 5.45 5.69
ASB Bank 6.35 ▼4.99 5.45 5.69
Avanti Finance 6.65 - - -
Basecorp Finance 7.25 - - -
Bluestone 6.89 - - -
BNZ - Classic - 4.95 5.39 5.69
BNZ - Mortgage One 6.39 - - -
BNZ - Rapid Repay 6.39 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 6.39 5.55 5.99 6.29
BNZ - TotalMoney 6.39 - - -
CFML Loans 7.25 - - -
China Construction Bank - 5.35 5.80 5.99
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼4.89 - -
Co-operative Bank - Owner Occ 6.25 ▼4.99 5.39 ▼5.69
Co-operative Bank - Standard 6.25 ▼5.49 5.89 ▼6.19
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 5.35 5.85 -
Heartland Bank - Online 4.60 ▼4.79 5.29 5.39
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.50 5.60 6.00 -
HSBC Premier 6.34 5.09 5.34 5.59
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 6.00 ▼4.79 5.15 ▼5.69
Kainga Ora 5.85 5.31 5.58 5.97
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 6.00 5.95 6.45 6.79
Kiwibank - Offset 6.00 - - -
Kiwibank Special - 4.95 5.45 5.89
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society ▲6.95 5.55 6.15 -
Pepper Money 5.29 - - -
Resimac 5.59 6.54 6.44 6.98
SBS Bank 6.29 ▼5.39 ▼5.79 5.99
SBS Bank Special - ▼4.89 ▼5.29 5.49
Select Home Loans 6.89 - - -
TSB Bank 7.05 ▼5.65 6.09 6.39
TSB Special 6.25 ▼4.85 5.29 5.59
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 6.49 5.55 6.15 -
Westforce credit union - Special - 5.35 5.85 -
Lender Flt 1yr 2yr 3yr
Westforce credit union - Standard 5.85 6.05 6.55 -
Westpac 6.39 ▼5.55 6.05 ▼6.29
Westpac - Offset 6.39 - - -
Westpac Special - ▼4.95 5.45 ▼5.69
Median 6.34 5.33 5.79 5.93

Last updated: 11 August 2022 8:40am

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