New Zealand’s Housing Boom Cools as Rates Rise

New Zealand home prices fell on an annual basis for the first time in 11 years in July, adding to signs of a slowdown for the global economy as central bankers worldwide try to tame inflation, the Wall Street Journal reported. The national median sale price of 810,000 New Zealand dollars, equivalent to $519,000, was 1.8% lower than a year earlier, cooled by higher interest rates and lending restrictions, the country’s real-estate institute said Thursday. It was the first annual fall in prices since July 2011. July’s median price was 4.7% lower than June’s and is down about 12% from its peak of NZ$925,000 in November last year. Property prices skyrocketed all over the world during the Covid-19 pandemic, when low interest rates and government stimulus spurred many to invest in real estate, which in turn raised concerns among policy makers about housing affordability and growing inequality. Housing markets are now cooling in many countries as stimulus policies are withdrawn, but the slowdown could turn into a rout, with unpredictable economic effects, if central bankers don’t manage the situation effectively. New Zealand’s property boom was particularly acute. Home prices had increased by nearly 50% over 2020 and 2021, spurred both by stimulus policies in response to the Covid-19 pandemic and a long-term shortage of new homes. <a href="">Read more.</a>