Aussie and NZ Property Markets
There’s been a lot of scaremongering in the media lately about how the Australian property market has started to come crashing down, with prices already plummeting in some main cities, and how this is bound to impact the NZ property market in a similar fashion.
Hold on, before you just assume the worst, let’s look a bit closer.
- Australia’s currently suffering a credit crunch because their banks have significantly tightened up their purse strings due to years of delivering bad lending to people who couldn’t really afford it, which has left investors struggling to refinance or acquire funds for new properties. No such credit crunch exists in NZ.
- There’s an over-supply of property across the ditch because the dipping prices in Melbourne and Sydney in particular are scaring people into selling before it gets worse. Over here, we have an under-supply of available housing stock. NZ nationwide listings were down 2% in the three months to February from a year ago.
- Nearly 50% of recent Australian consents have been for apartments. In NZ, the proportion is a mere 11%. The apartment market is far more volatile than the standalone dwelling market.
- Aussie states have levied punitive stamp duties and annual land taxes for non-residents.
- The withdrawal of Chinese buyers in Australia has had a far larger impact than over here.
- At its peak, 45% of home lending in Oz was to investors. Our peak was only 35%. Recently 31% of lending in Australia was still to investors, whereas we’re sitting at 18%. New investors over there are nervously waiting to see if the government will bring in mooted new policies to remove negative gearing, depending on the result of the upcoming election.
- The household debt to income ratio is higher in Australia than NZ (190% versus our 164%), whilst their debt servicing (interest payments versus income) ratio is 9.1% versus 7.8% over here. Our ratio has dropped significantly from 14% in 2008, whereas Aussie has seen a smaller drop, from 13% in the same time frame.
So all in all, there’re many differentiators between our two neighboring property markets, so it’s like comparing chalk and cheese – or rather should we say like comparing kiwis and kangaroos. Totally different!