Have you considered putting up your properties for sale in New Zealand? Home prices in New Zealand have appreciated considerably in recent years. There is a worry that New Zealand could be sitting on top of a real estate bubble.
This is in fact a point made by Goldman Sachs, who said that there is a 40% chance that the housing market in New Zealand will suffer a collapse over the next two years. Goldman Sachs made this prediction is a research paper published recently.
The financial institution reported that New Zealand has the most overvalued housing market among G10 group of developed nations. By a housing market collapse, one means home prices falling by 5 percent or more after adjusting for inflation. This is serious stuff. Should you sell your house in New Zealand fast, keeping this in mind?
Here’s what the Goldman Sachs report said, “Using an average of these measures, house prices in New Zealand appear the most over-valued, followed by Canada, Sweden, Australia and Norway. According to the model, the probability of a housing bust over the next five to eight quarters is the highest in Sweden and New Zealand at 35 to 40 percent.”
Politicians in New Zealand, such as opposition party Labour housing spokesman Phil Twyford have been warning for a long time about the possibility of a housing market collapse, which they say could be just as bad as skyrocketing prices. Mr. Twyford said that this was because of 9 years of neglect by the government.
"A housing bust would see a slow-down in house construction. When only half the houses Auckland need are being built at the moment, a slow-down would be a disaster. The resulting job losses and reduction in household confidence would ripple through the wider economy," Mr. Twyford said.
Finance Minister Steven Joyce said that the Goldman Sachs report was an exaggeration but added that the conditions that led to New Zealand's housing boom were no longer so apparent. He said, "We need to be cautious with the Goldman Sachs report because the model is very sensitive. They define a bust as a 5 per cent decline in real house prices."
"The Government has a number of measures in place to influence both demand and supply in the housing market, with LVR restrictions and the bright line test moderating demand, and significant regulatory activity encouraging supply, plus of course the Crown house building programme which has been expanded significantly today,” Mr. Joyce added.
New Zealand is favourably placed compared to many other developed economies because it receives a very high number of immigrants relative to its population.
This means there will always be a lot of demand for homes in New Zealand. So it’s never a bad idea to buy property in New Zealand online, especially in fast growing cities in Auckland, as long as you don’t end up paying something over-the-top for it and stick to your budget.