New Zealand now the hottest property market in the world
According to a new global ranking of property price growth, New Zealand is now home to the hottest property market in the world.
Estate agents Knight Frank revealed that, over the last year, the country saw price growth of 11.2 per cent, coming in behind Turkey, however once the inflation impact was removed and real price growth was looked at, New Zealand took the top spot. The only other country to have enjoyed price growth of 10 per cent or more over the last year was Canada, the report found.
International investors – especially Chinese buyers – are one of the main reasons behind the hot property market, with many properties – especially those in New Zealand's largest city, Auckland, being sold to non-residents. According to data compiled by Core Logic, 37 per cent of buyers in 2012 were investors, while today that figure sits at almost 50 per cent.
Auckland is at the centre of the country's property boom, with average house prices in the city – which regularly feature in the world's most liveable cities rankings – reaching NZ$1 million for the first time.
According to New Zealand's QV house price index, the average property in Auckland was given a value of NZ$1,013,632 in August, representing a huge rise of 15.9 per cent over the last 12 months. This figure is also higher than the average home in London, which currently stands at £472,384.
In a bid to prevent a property bubble, the country's central bank recently rolled out new deposit requirements which call for investors to stump up at least 40 per cent of the purchase price of the property in cash. These measures have already lead to a slight slowdown in the market, according to QV spokesperson, Andrea Rush. "There was a strong surge of activity in June and July however it now appears the new restrictions for investors adopted by banks towards the end of July have started to have an impact.
“In recent weeks there has been a drop off in market valuation requests, auction clearance rates, open home attendees and loan application rates in these centres," said Ms Rush.
In terms of countries whose property markets are not faring so well, Knight Frank identified major price falls in Taiwan, which saw a drop of 9.4 per cent in prices over the last 12 months, placing it in last place in the rankings. Singapore and Hong Kong also fared poorly, with large reductions in prices. Brazil, despite its recent time in the spotlight thanks to the Rio Olympic Games, did not enjoy strong property growth either, and it was one of 11 countries featured in the Knight Frank report to record property prices falls over the last 12 months. The UK saw price growth of 5.2 per cent, placing it at number 24 on the Knight Frank rankings, while the US saw price growth of 5.1 per cent.
Across the globe, house prices have converged, said the report, with the average global house price rising by four per cent over the last 12 months, sitting at a similar level to that recorded the year prior.