What Makes NZ The 'Bubbliest' Housing Market In The World?

Date Jul 5, 2021
Blog category Mortgage
By Tina M.
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Contents:

According to Bloomberg’s recent data, New Zealand has the "bubbliest" housing market this year, making it the most expensive country to live in, followed by Canada and Sweden.

The top countries that have the highest housing prices in the world include Norway, UK, Denmark, the US, Belgium, Austria, France, Netherlands, Germany, Portugal, Switzerland, Australia, Colombia, Spain, Greece, Korea, Finland, Italy, Ireland, and Japan.

What is a Housing Bubble? 

Bubbles are defined as factors that influence house prices, such as economic growth, interest rates, mortgage offerings, and credit availability to individuals and citizens in each country. 

An economic downturn, high interest rates, and a drop in demand are among the factors that cause a housing bubble to burst. A gradual rise in pricing is less likely to be controlled when this occurs, making it more difficult for investors to find "affordable" property, particularly in the aforementioned countries.

Unaffordable homes across the world

“Renovictions” in Canada

In Canada, landlords have been accused of using "unsavoury tactics" to evict tenants who pay low-cost rents, such as neglecting maintenance, harassing tenants, or offering cash bonuses that may be appealing to those with limited income, but leave them without a decent place to live.

Housing crisis in Sweden

Like the rest of Europe, Sweden has seen an "inexorable rise" in the cost of renting and owning a home. The local government appears to be struggling even more as the pandemic drives property prices to new highs around the world.

NZ housing market crash in 2021

For many Kiwis, renting a space, let alone owning a home, is extremely expensive. Given that New Zealand has surpassed Canada in terms of having the bubbliest housing market, this doesn’t bode well for home seekers looking to find their own property.

Housing shortage in NZ

It is believed that one of the major reasons why housing has been at an all-time high, particularly this time, is an increase in demand for housing, even though only a few properties are being sold to the general public. 

However expensive houses are today, one option is to apply for a mortgage plan that will assist you with your repayments.

Save or Borrow?

Even if you have the financial means to make a large purchase, it may be wiser to wait until you have the funds.

When purchasing a home, it’s important to consider more than just the total cost of the house. If you live alone and/or renting, make a list of all your monthly expenses, such as utilities, phone bills, student loans, and so on. This way, you can gauge how much you’re willing to spend and pay for a home while still have enough for emergencies.  

Saving up and paying in advance can also offer you a better bargaining position. You can also utilise the funds to make a larger down payment and obtain a smaller loan, lowering your overall borrowing costs.

Meanwhile, borrowing now could come in handy if you have an emergency, such as hospital costs or an accident, and you don't have any savings to pay for them. 

It would also be advantageous to obtain a loan to purchase a home if you believe that prices will go up before you’re able to afford the property.

Apply for a mortgage

Several banks offer competitive rates, particularly if you are a first-time homebuyer. If your lender qualifies you to apply for a mortgage, you can choose how much you want to pay, and for how long.

Here are some of New Zealand's lowest home loan rates, with repayment terms ranging from 6 months to 5 years.

Lender

Product

Variable

6 months 

12 months

(1 year)

18 months

24 months

(2 years)

36 months

(3 years)

48 months

(4 years)

60 months

(5 years)

ANZ

Standard

4.44%

3.99%

2.79%

2.95%

3.19%

3.59%

3.99%

4.39%

Special LVR

 

3.39%

2.19%

2.35%

2.59%

2.99%

 

 

ASB

Standard

4.45%

2.99%

2.19%

2.49%

2.59%

2.99%

3.39%

3.69%

Back My Build

1.79%

 

 

 

 

 

 

Bank of Baroda

Standard

5.25%

 

3.85%

3.90%

 

 

 

Bank of China

Standard

5.00%

5.15%

2.25%

2.35%

5.50%

5.70%

5.99%

Special 

4.35%

3.45%

2.15%

2.15%

2.55%

2.75%

3.05%

3.35%

BNZ



Special Classic

 

2.99%

2.19%

2.35%

2.55%

2.99%

3.39%

3.69%

TotalMoney

4.55%

 

 

 

 

 

 

Std & Flybuys

4.55%

3.59%

2.95%

2.79%

3.15%

3.59%

3.99%

4.29%

China Construction Bank

Standard

5.00%

4.70%

4.70%

4.80%

4.95%

4.95%

4.95%

Special

2.65%

2.65%

2.65%

2.80%

2.89%

2.99%

Co-operative Bank

Owner Occupied

4.40%

2.19%

2.39%

2.19%

2.59%

2.99%

3.39%

3.69%

Standard

4.40%

2.69%

2.89%

2.69%

3.09%

3.49%

3.89%

4.19%

First Home Buyer Specia

1.99%

Heartland Bank

Residential

1.95%

1.85%

2.35%

2.45%

Reverse Mortgage

5.95%

HSBC

Premier

4.49%

2.79%

2.19%

2.19%

2.48%

2.69%

2.99%

3.19%

ICBC

Standard

5.79%

5.35%

4.49%

4.69%

4.99%

5.45%

5.49%

Special

3.69%

2.89%

2.25%

2.35%

2.35%

2.65%

2.89%

2.99%

Kiwibank

Standard

3.40%

4.30%

3.04%

3.40%

3.84%

4.24%

4.54%

Special

3.55%

2.19%

2.55%

2.99%

3.39%

3.69%

Offset Mortgage

3.40%

Kookmin

Standard

5.20%

3.90%

3.90%

4.00%

SBS

Residential

4.54%

3.89%

2.69%

2.89%

2.99%

3.29%

3.59%

3.89%

Special

3.39%

2.19%

2.39%

2.49%

2.79%

3.09%

3.39%

Unwind reverse equity

5.85%

TSB

Standard

5.34%

3.69%

2.99%

3.15%

3.35%

3.79%

4.19%

4.19%

Special

4.54%

2.89%

2.19%

2.35%

2.55%

2.99%

3.39%

3.69%

Westpac

Standard

4.59%

3.59%

2.85%

3.05%

3.19%

3.59%

3.99%

4.29%

Special

2.99%

2.25%

2.45%

2.59%

2.99%

3.39%

3.69%

Choices Offset

4.59%

Choices Everyday

4.69%

Source: Interest.co.nz

Read more about it here: NZ Mortgage Wars: Who Offers The Lowest Home Loan Rates In New Zealand?

Whether you're a first-time homebuyer or looking to upgrade your home, you can find competitive mortgage rates using our comparison tool here at glimp! 

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Matthew Symmons , 2021-12-04

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