The gap between what we pay for a house and the amount we earn is the widest on the planet. New Zealand, according to the Fitch ratings agency, is the most expensive place in the world for wage earners to buy a home.
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The agency’s latest Global Housing and Mortgage Outlook report appears to confirm what many people have thought, and the Property Council is among those voicing concern about one of the causes of high property prices — a shortage of supply.
Its chief executive Connal Townsend says: “We have a planning system in crisis with excessive restrictions on development which are hampering delivery efforts.”
Yes, red tape is slowing the construction of much needed homes in Auckland and elsewhere.
It’s not all bad news though. The rampant rise of Auckland house prices has slowed — going up just 0.16 per cent between November and December, according to property data firm CoreLogic.
Mix in data from October and the firm’s Jonno Ingerson says home price inflation has the “appearance of a genuine slowing rather than a blip”.
He says there will be no property crash, adding that any drop in property values is likely to be “shallow and short-lived”. He is expecting to see a more buoyant market outside Auckland this year with values increasing slightly.
In a fix
Mortgage hunters have some reasonably good fixed interest rate deals to choose from with the BNZ offering 4.49 per cent for three years. Its two-year deal of 4.39 per cent is also worth considering.
However, the rates are a far cry from the exceptional 3.99 per cent offered last year by SBS — well done if you snapped that up.
For those who want to lock in a rate for seven years, BNZ is offering 5.9 per cent. And if you have a reliable crystal ball, TSB’s 5.75 per cent for 10 years might seem attractive.
Meanwhile, a minority of industry commentators expect to see fixed rates below 4 per cent by the year end.
The Reserve Bank’s Graeme Wheeler will make his next OCR announcement on January 28.
While some economists expect him to lower the OCR from 2.5 to 2 per cent this year, it is not expected he will announce any changes for a few months.
But global economic storm clouds might force his hand sooner than expected.