The price of luxury residential property in New Zealand’s biggest city rose faster than anywhere else in the world, a new international report says.
Global property consultancy Knight Frank found property prices in New Zealand’s biggest city rose 17.5 percent in 2020 – some 12 percent higher than the regional average.
Now in its 15th year, the Knight Frank Prime International Residential Index (PIRI) tracks movements in luxury prices across 100 of the world’s top residential markets.
“Our assessment of the world’s leading prime residential markets confirms that average house price growth accelerated over the past 12-months,” says Knight Frank’s head of research Liam Bailey.
“Auckland led the pack with an 18 percent uptick, reflecting New Zealand’s sure-footed handling of COVID-19,” he adds.
Bayleys residential director Johnny Sinclair said the data confirms what many have been feeling on the ground for months.
“Our government’s health response and associated policy enabled New Zealand to begin a rapid economic recovery which has helped Kiwis retain a comparative degree of normalcy despite the global pandemic,” he says.
“Record-low mortgage rates and the ‘wealth effect’ of fiscal stimulus which has served to inflate asset prices have spurred demand for residential property not only in Auckland but across the country,” he adds.
Luxury housing markets performed better than expected in 2020 with 66 of the 100 markets featured in the PIRI seeing growth, and prices on average, rising by almost two percent, the report says.
However, just four markets registered double-digit price rises including Auckland (17.5 percent), Shenzhen (13.3 percent), Seoul (11.7 percent) and Manilla (10.2 percent).
According to the data, Australasia was the second-best performing region in 2020 with an average annual price growth of 4.9 percent.
Attributing this growth to a “surge of pent-up demand as lockdowns eased and homeowners reevaluated their lifestyles,” the report notes properties in the highest demand were those proximate to mountainous, rural and waterfront locations.
Mr Sinclair says the pandemic has fed a growing demand for properties in coastal and rural areas as Kiwis place greater importance on space and lifestyle opportunities.
“We have seen a shift in attitudes since COVID, with a growing number of residential purchasers looking to lifestyle locations for added-value,” he explains.
“Aided by ultra-low mortgage rates, Kiwis are snapping up land made available by Auckland’s Unitary Plan in their search for space,” he says.
Despite Auckland’s positive performance in the report, its authors warn New Zealanders to expect intervention in 2021 “as the government looks to rein in price inflation by tightening lending rules or raising taxes.”
“We have already begun to see tightening policy come into effect with loan-to-value ratios reintroduced from March 1, and more government housing announcements scheduled over the next few months,” Mr Sinclair says.
Bayleys Realty Group is a strategic partner of Knight Frank LLP - the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 20,000 people operating from 488 offices and 57 territories. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants.