Every month we are treated to press releases from various organisations exclaiming that prices are rising (rarely falling). From my perspective, price rises are dependent on how you look at the data - so are incomes.
I have updated all Inventory data in the tab above. Rent prices will be published soon.
My go-to information is to review the current house prices against current incomes. They are so consistent that the big lag in income data is no great problem, the next income data in June can be predicted by house price rises.
Changes in building codes simply add costs, they include what appear to be minor changes which have had a major impact on prices of new homes, raising prices of existing homes by similar amounts.
2013, 4x2 timber framing treatment was upgraded, timber framing is a major component of houses. Scaffolding was suddenly required to build 1m off the ground creating a major industry of scaffolders.
Back further in 2003-2004 insulation, double glazing and water barriers were introduced, while a good idea they change the base line of new houses.
New houses drive the value of older houses because an existing house does not need these features to be able to buy it. Buyers compare new to old when purchasing.
This chart of the Reserve Bank House Price Index shows the major changes in rules as sharp rises in actual price (grey shading). The bubble in 2021 is also evident.
House prices compared to Household Incomes - Affordability
House prices compared to Household Incomes show the real impact of prices on buyers, ie buyers use current income with their bank to buy a house. Some regions show a recent rise or fall in affordability, but NZ shows no change since 2018, still 7.7 before and after the interest driven bubble. (look through from the earlier data up to 2020 skipping the bubble to 2023.
The differences between regions may be simply the methods used by councils to approve new projects. Maybe Wellington and Auckland are more relaxed about some rules than Christchurch and Waikato (both showing increases in affordability). As if to prove this, today’s data has supply in Auckland and Wellington at just 0.1% below equilibrium, while Canterbury and Waikato are 0.8% and 1.3%.