{"id":7818,"date":"2016-05-06T01:00:46","date_gmt":"2016-05-05T15:00:46","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=7818"},"modified":"2016-05-06T01:00:46","modified_gmt":"2016-05-05T15:00:46","slug":"nz-market-on-fire","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/nz-market-on-fire\/","title":{"rendered":"NZ market on fire"},"content":{"rendered":"

 
\nBernard Hickey<\/strong> joins us for the first look at the New Zealand market which is going gangbusters and he explains why that is the case.
\nTranscript:<\/strong>
\nKevin:<\/b>\u00a0 We\u2019re looking at the real estate market. We\u2019re going to go across \u201cThe Ditch\u201d now and have a look at New Zealand. Joining me, economist and publisher for Hive News, Bernard Hickey.
\nBernard, thank you so much for your time.
\nBernard:<\/b>\u00a0 Hello. How are things?
\nKevin:<\/b>\u00a0 Wonderful, thank you. We\u2019re getting great reports on this side of \u201cThe Ditch\u201d about what\u2019s happening in New Zealand. The economy there seems to be going quite well. What sort of an influence is that having on the property market?
\nBernard:<\/b> \u00a0It is certainly helping. We have economic growth of somewhere between 2% and 3%, depending on where you are, and we have very high net migration. We have strong construction, and we have a booming tourism sector. That\u2019s all helping the economy.
\nThe dairy part of the sector is not doing so well. It\u2019s a bit like our version of iron ore, with a slump in prices. That means that some parts of the economy, particularly those most exposed to dairy, have struggled over the last couple of years. But the big cities are doing very well because of strong net migration and lots of activity in construction and tourism.
\nKevin:<\/b>\u00a0 There is a saying that south of the Bombay Hills, nothing much happens, but is the Auckland influence on real estate still that strong, or is it spreading out to other parts of New Zealand?
\nBernard:<\/b>\u00a0 Auckland dominates the New Zealand market and, in many ways, the economy. We have about one-third to 40% of our population in Auckland. It\u2019s by far the fastest growing part of the economy, and that\u2019s because largely it has the most people coming.
\nWe have about 120 people per day arriving in Auckland at the moment. That\u2019s because net migration is very strong \u2013 for a bunch of reasons. We have a lot of New Zealanders actually coming back from Australia to live in New Zealand again and a lot fewer New Zealanders leaving New Zealand to work in Australia.
\nBecause Australia and New Zealand have this unique relationship where we can work in each others\u2019 countries relatively easily without having to apply for a special visa, there is a lot of travel back and forth, and generally, over the last 20 or 30 years, it\u2019s been New Zealanders going to live in Australia.
\nBut in the last couple of years, we\u2019ve seen that turn around quite dramatically to the point now where we\u2019re getting net migration from Australia to New Zealand, just over 1000 in the last year or so. That\u2019s helping to boost demand for housing, particularly in Auckland, because about half of the new migrants come to Auckland.
\nAt the same time, in Auckland, you have a construction boom going on. We have a lot of commercial property and housing that needs to be built. One of the reasons why Auckland\u2019s housing market has done so well in the last three or four years is that we\u2019re simply not building enough houses.
\nWhen you look at the numbers, we\u2019re building just over 1000 per month at the moment, and we really need to be building about 1500 houses per month just to deal with the net migration and the net population growth. That\u2019s helping to boost demand and prices in Auckland.
\nKevin:<\/b>\u00a0 Yes, that will keep the prices climbing, won\u2019t it? What about other parts of New Zealand, say, down around Taupo? I\u2019d like to talk to you about Christchurch, as well, but let\u2019s look at other parts of the North Island, firstly.
\nBernard:<\/b>\u00a0 Obviously, with the boom in Auckland in the last three or four years, that started to radiate out to some of the other bigger cities, and the ones closest are Hamilton and Tauranga. There is what they call a Golden Triangle in New Zealand between Auckland, Tauranga, and Hamilton.
\nThey are the three biggest cities in the upper North Island, and they\u2019ve had relatively strong population growth and economic growth over the last decade. They\u2019re connected up by strong railway and strong road networks, and a lot of the activity in the North Island happens in that Golden Triangle.
\nPrices have risen upwards of 20% in Hamilton and Tauranga in the last year, catching up with what\u2019s happening in Auckland. Now the heat is radiating out to other bigger cities, including Wellington at the bottom of the North Island and other cities such as Dunedin, even Nelson and also, strangely, Gisborne and Hawke\u2019s Bay, where you\u2019re getting some people in Auckland who have made big equity gains on their houses realizing that they can get a lot more bang for their buck by moving to the likes of Napier, Gisborne, or Dunedin. That\u2019s helping to boost prices in those places, as well.
\nThere is one exception to that, and that\u2019s Christchurch, which is New Zealand\u2019s second biggest city. It has obviously been very disrupted in the last six or so years by the earthquakes in 2010 and 2011, which destroyed tens of thousands of houses. The rebuild of the residential part of Christchurch is coming to an end now, and there has been a lot of new supply coming onto the market.
\nIn the last year or so, the Christchurch market has flattened out in terms of price inflation and rents have also started to drop there because of the extra supply with a big amount of rebuilding that went on over the earthquakes. But in the rest of the country, you\u2019re seeing house price inflation anywhere between 10% and 20% at the moment.
\nThe other big factor to watch in the New Zealand market is what the Reserve Bank of New Zealand is doing. A bit like in Australia where increased capital requirements and direction to the banks to make it harder for rental property investors to borrow, you\u2019re seeing something similar here, too, in the last year, where the Reserve Bank, in November, restricted rental property investors to borrow no more than 70% of the value of the home in Auckland. That cooled things down a bit in Auckland from November onwards.
\nBut it\u2019s interesting. Just in the last couple of weeks, we\u2019ve seen auction clearance rates start to rise again in Auckland, and the essential problems there of record high net migration up against insufficient supply is starting to get some heat back into the market.
\nKevin:<\/b>\u00a0 All good news coming out of New Zealand. Bernard, unfortunately, we are out of time but thank you so much. Bernard Hickey who is an economist and publisher with Hive News. That\u2019s HiveNews.co.nz.
\nBernard, thank you very much for your time.
\nBernard:<\/b>\u00a0 Cheers.
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

  Bernard Hickey joins us for the first look at the New Zealand market which is going gangbusters and he explains why that is the case. Transcript: Kevin:\u00a0 We\u2019re looking at the real estate market. We\u2019re going to go across \u201cThe Ditch\u201d now and have…<\/p>\n","protected":false},"author":176692471,"featured_media":7819,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,10,11,13,22,27],"tags":[101],"class_list":["post-7818","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-research-topic","category-trends-topic","tag-podcast"],"yoast_head":"\nNZ market on fire - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/nz-market-on-fire\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"NZ market on fire - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  Bernard Hickey joins us for the first look at the New Zealand market which is going gangbusters and he explains why that is the case. 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