In the last year billions was wiped out of New Zealand’s booming property market.
New Zealand's housing market has been a hot topic for several years, with consistently high prices making it challenging for many people to afford their own homes. But in recent months, the market has taken a turn, with house prices across the country declining. This decline has been attributed to a range of factors, including stricter lending rules by the government and economic uncertainty caused by the COVID-19 pandemic. In this blog post, we'll explore the reasons behind the decline in house prices in New Zealand and how it's impacting the country's economy.
Uncommon practices such as low cost land being sold to large corporations in Auckland is not unheard of. The property market in Auckland nearly hitting the 2 million mark for the average home. But recently that has seen a decline, still one of the most expensive places to afford a home, in the modern world.
Foreign investment has sent the prices of homes sky rocketing. The lending criteria has made it difficult for these foreign investors to buy homes in the New Zealand market (2023).
These foreign investors then resell them to first home buyers, who can barely get banks to approve these high cost homes in 2023. The tiny town houses still asking close to a million dollars in Auckland, land subdivided and resold as batches of houses were built in Auckland, at a very low cost, with foreign investors, reaping the profits from the property market, in Auckland and New Zealand.
The New Zealand Government has taken multiple steps to stimulate the housing market, which has experienced a decline in prices in recent years. One of the measures was the introduction of the KiwiSaver HomeStart scheme, which assists first-time homebuyers with a grant of up to NZD $5,000 for an existing home or NZD $10,000 for a new home. The scheme's aim is to enable more people to enter the housing market by providing financial incentives.
If you’re planning on purchasing a home in New Zealand’s biggest city, Auckland, be prepared to shell out some serious cash. In recent years, Auckland’s property market has skyrocketed, with homes costing an average of $1.2 million NZD ($845,000 USD) in January 2021. This is a significant increase from the average price of $520,000 NZD ($365,000 USD) a decade ago. With such a high cost of living in Auckland, many are struggling to find affordable housing.
The skyrocketing housing prices in Auckland have not only affected the permanent residents of the city, but also those seeking temporary accommodation. The result of this is the exorbitant cost of short-term rentals in the city, or even in the surrounding regions. Students, traveler’s, and business professionals who are looking for temporary accommodation have to bear the brunt of these high prices. The struggle to find accommodation at affordable rates is a common issue amongst the visitors to the city.
While the government's efforts in addressing the issue of unaffordable housing in Auckland are commendable, it remains to be seen if these policies will have a significant impact on the problem. It is essential for the government to continue to identify and implement effective solutions to address the issue, given the high cost of homes in Auckland is affecting the wider social and economic well-being of New Zealanders.
Additionally, high housing prices can lead to increased inequality, as only those with significant financial resources can afford to buy a home. This can create a social divide, which can have long-term negative impacts on society.
