Christchurch the only part of NZ house prices aren't expected to rise

Christchurch is the only region in New Zealand where house prices aren't expected to rise over the coming year, according to a new survey.

Auckland is back in positive territory too, the Colliers quarterly survey reveals.

NZIER principal economist Christina Leung told The AM Show on Friday there's been a "real turnaround from the net 6 percent expecting a decline in house prices in the June quarter".

There's now a net 10 percent (optimists minus pessimists) expecting prices in the super city to rise in the next 12 months, continuing to rise from the March quarter's minus 10 percent. 

Confidence in prices has risen across most of the country.

"We now have a net positive 20 percent of respondents expecting a higher median price over the next 12 months, up from a net positive 16 percent in the previous June 2019 quarter survey," said Colliers research and communications director Chris Dibble.

"Twelve of the 13 regions monitored recorded a net positive score, with Christchurch the exception."

Christina Leung.
Christina Leung. Photo credit: The AM Show

Queenstown once again topped expectations, as it has done in every Colliers survey since 2016. Tauranga/Mt Maunganui remained in second place, with Napier/Hastings replacing Wellington.

The growing confidence is down to a "lot of factors", said Leung.

"Lower interest rates, also population growth is still fairly solid when you look at net migration inflows. Earlier this year we also had the easing in LVR restrictions and also with the Government taking capital gains tax off the table. All these factors have made residential investment more attractive. 

"Also with interest rates so low, people are looking for a place to park their money. It just makes housing a bit more attractive as an investment."

House prices have stabilised in previously red-hot markets like Auckland, but are refusing to drop to affordable levels.

"The fact we've got million-dollar houses... really asks the question, how are people able to afford houses at these levels?" asked Leung, who provided a few answers of her own.

"Globally because we've got interest rates at such exceptionally low levels - and in some economies we've got quantitative easing - all this cheap money just slushing around the system, investors everywhere are just looking for a place to park their money. 

"You're seeing this come through in demand for commercial property as well. Everyone is chasing yield in such a low interest rate environment." 

Colliers also asked if the Government's KiwiBuild reset would help young and low-income Kiwis into their own homes - about half disagreed, a third thought it would and the rest thought nothing would change or werent' sure.