New Zealand’s largest real estate agency has stated that population growth is responsible for the country’s rapidly spiralling property prices, and that thousands of new homes need to be built if a property bubble is to be avoided.
Recently released census figures show that New Zealand’s population has reached an all-time high of 4,242,048 – 214,101 more people than at the last census held seven years ago.
Much of this population growth has taken place in Auckland and Christchurch – the two cities where house prices have risen at particularly exorbitant levels in the last couple of years.
In recent months the NZ government has brought in a number of new measures to slow the property market, most notably by tightening loan-to-value (LVR) mortgage rates, but according to real estate agency Harcourts, more house construction, particularly in Auckland and Christchurch, is the real answer to the problems caused by rising property prices.
“Our population is growing and we need more houses,” explained Hayden Duncan, CEO of Harcourts New Zealand. “Adjusting LVR restrictions and interest rates won’t change that.”
According to Duncan, rises in the average national property price are misleading as the average is being spiked by the mammoth house price gains in Auckland and Christchurch. Therefore, introducing mortgage restrictions on buyers looking to purchase in other areas could significantly harm the market.
“Prices have only risen sharply in Auckland and Christchurch,” said Duncan. “Construction simply has not kept up with demand. We need the government to make the consent process easier and more attractive to developers to build in our two largest cities.”
He added: “[Some areas in] Provincial New Zealand – Wellington, Dunedin and Hamilton – do not have an issue with housing affordability, but as of 1st October [when the mortgage amendments were introduced] things have got a lot harder for people wanting to purchase in these areas.”