According to the most recent Real Estate Institute figures, median house prices across New Zealand increased by 16.4 per cent to the end of August 2020 - to $675,000, up from $580,000 in August 2019.
Every region in the country recorded an annual increase in median house prices.
Westpac now expects a 3.5 per cent increase in house prices between March and December 2020 - a 6.3 per cent annual house price inflation for 2020 and 8 per cent for 2021.
"The housing market has shot the lights out, far exceeding the forecast we made when Covid first broke out," Westpac chief economist Dominick Stephens said in a recent report.
What is going on? This supposed to be the biggest economic crisis in living memory.
The recent surge will certainly be a big disappointment for those worried about housing inequality and the social issues that it causes.
It will also dismay a younger generation that might have hoped that one pandemic silver lining would dip, or at least a pause in the market.
The disappointment has sparked criticism of the Reserve Bank's monetary policy, which is driving record low-interest rates.
But there are other factors at play in the housing market.
While immigration has been stalled by the pandemic, a sizable inflow of returning Kiwis may actually be more active home buyers than the average immigrant.
As well as slashing interest rates and printing money to force mortgage rates to record lows, the Reserve Bank has also removed its loan-to-value restrictions.
That loosens bank lending rules, allowing new home buyers in the market with lower deposits.
But it makes it easier for investors to buy using equity from their existing properties.
New Zealand's housing market is unstoppable. Photo / Mark Mitchell
Housing continues to be viewed as a safe bet by New Zealanders in time of great economic uncertainty.
And as the Reserve Bank acknowledged in its latest Monetary Policy Review, strong house prices create a wealth effect which may be helping maintain confidence in the economy - consumers spending and ultimately employment.
It is not technically the Reserve Bank's job to deal with house prices or even social inequality.
It targets inflation and aims to keep employment strong.
But a mini-housing boom is starting to look like a side-effect of current crisis policy settings.
On balance, give the grim prognosis for other parts of the economy, that is probably good news.
A house price crash would have been disastrous for the country.
But if this proves to be sustained, it will underscore the urgency of the Government to address the holy grail of housing supply.
Hopes that the pandemic might have brought some breathing room to play catch-up are fading.
Progress has been made in the past three years, but not nearly enough.
