NZ housing among the most overvalued in world

By Lane Nichols

File photo / Mark Mitchell
File photo / Mark Mitchell

New Zealand housing affordability is again under the spot light with new international research putting our nation's housing among the most overvalued in the developed world.

The Economist magazine has looked at global house prices against people's relative after-tax income and the price of renting.

It found New Zealand's rampant housing market grew at 7.3 per cent in the last year, the sixth fastest among 23 surveyed nations.

Housing in this country was 74 per cent overvalued compared to rents, the third worst surveyed country. Only Canada on 76 per cent and Hong Kong on 79 per cent fared worse.
In relation to income, New Zealand housing was 30 per cent overvalued, behind Canada (32 per cent), Australia (33 per cent) and Belgium (46 per cent).

"Based on an average of these measures, houses are at least 25 per cent overvalued in nine countries," the Economist found. "Judged by rents, the most glaring examples are in Hong Kong, Canada and New Zealand.

The overshoot in these economies and others bears an unhappy resemblance to that prevailing in America at the height of its boom before the crisis."

Real Estate Institute of New Zealand figures show the national median house price for July was $416,000, a jump of 8.1 per cent year-on-year.

- NZ Herald

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