MARKET VIEW NEW ZEALAND

While New Zealand is in discussion with Australia about a future alliance (monetary harmonisation etc.), the latest statistics from the International Monetary Fund show New Zealand’s economy to be robust and to have shown sustained growth over a number of years. Gross Domestic Product, for instance, averaged nearly 4 per cent from 1999 to 2003. The government reported an unemployment rate of 4.3 per cent in May and the Reserve Bank of New Zealand puts annual inflation at a healthy 1.5 per cent.

Although the Organisation for Economic Cooperation and Development’s (OECD’s) recent annual Economic Outlook report found that the pace of New Zealand’s economic activity was cooling, recent statistics from the Real Estate Institute of New Zealand show the median house increased 20.3 per cent from NZ$200,000 in March 2003 to NZ$240,000 in March 2004. The southern province of Otago – well known for its Scottish heritage and the main city Dunedin referred to as the ‘Edinburgh of the South’ – showed the greatest rise with a median house price up 56 per cent to NZ$180,000. Increasingly popular provincial lifestyle provinces like Hawke’s Bay in the central North Island and Nelson/Marlborough at the top of the South Island were also up 29 per cent and 21 per cent respectively.

Larger population centres showed slower growth, albeit it off a higher base, with the Auckland region up 14.5 per cent, and capital city Wellington up 16 per cent. Auckland City and its neighbour across the harbour North Shore City had the country’s highest median prices at NZ $358,000 and NZ$389,000.

“Anecdotal evidence from the market over the past month suggests that activity levels may be slowing,” says Kirsty Stevenson, Auckland residential manager at Bayleys Real Estate, one of the countries largest players. “For good properties though, prices have stayed the same. For example, a sought after top four bedroom family home on a large site in a prime location still commands good money. But we do seem to have seen the end of the ‘silly money’ prices being paid for any and all property.”

The OECD warns that although the risks of a full-blown housing market bubble have diminished in New Zealand, they have not entirely disappeared.