Offshore Guidebook | Real Estate Investor Magazine Offshore Guidebook 2014 | Page 51

New Zealand New Zealand is the fifth best performer in the world in the latest Global Property Guide’s global house price survey. Nationwide median house prices surged 8.36% during the year to end-Q1 2014, after year-on-year rises of 8.02% in Q4, 6.4% in Q3, 5.11% in Q2, and 7.19% in Q1 2013. In Q1 2014, house prices increased by 2.66% from the previous quarter. Caterbury/Westland registered the biggest house price increase, with a 12.4% y-o-y rise in February 2014. It was followed by Auckland (10.7%) and Southland (8.3%). While house prices started to fall in early 2008 following the global economic recession, the decline was much less than in other countries. During 2008, house prices fell 8.94% (-11.91% in real terms). Then in 2009, house prices rebounded by 5.23% (3.21% in real terms). However in 2010, house prices fell again by 1.63% (-5.44% in real terms). The housing market recovered in 2011, with house prices rising by 2.91% (1.04% in real terms). In 2012, house prices rose by 6.52% (5.54% in real terms). Residential building consents surged by 27.5% during the year ended April 2014, according to Statistics New Zealand. Likewise, the total value of dwelling consents soared 28.8%. Despite this, median-days-to-sale fell by one day, to 34 days in April 2014, compared to a year ago. NZ’s propert y market is expected to remain strong in 2014, amidst strong economic growth. New Zealand’s economy is expected to grow by 3.3% this year, its strongest performance since 2007, according to the International Monetary Fund (IMF), after modest real GDP growth of 2.4% in 2013, up from 2.7% in 2012, 1.4% in 2011 and 1.9% in 2010, according to HSBC. Next year is expected to see New Zealand’s strongest economic growth since 2007, with projected GDP growth www.reimag.co.za of 3.3%, led by a surge in household spending, according to the Organisation for Economic Cooperation and Development (OECD). House prices in New Zealand are expected to continue rising, albeit at a slower pace, as demand continues to fall mainly due to a new rule restricting high loan-to-value ratio (LVR) lending. In April 2014, tota l dwel lings sold were down 20.2% year-on-year to 5,670 units, according to the Real Estate Institute of New Zealand (REINZ). The average floating mortgage interest rate remained unchanged at 5.8% in February 2014 from a year earlier, according to the RBNZ. On the other hand, the two-year fixed mortgage interest rate increased to 6% in February 2014 from 5.5% in the same month last year. The Reserve Bank of New Zealand raised its official cash rate (OCR) by 25 basis points to 2.75% in March 2014, for the first time in three years. Non-residents are generally allowed to buy houses in New Zealand. However, purchase of property does not give the buyer the right to live permanently in the country. RESOURCES Global Property Guide Offshore Handbook 2014 49