Housing stock nears $1 trillion
New Zealand houses are now worth a total of nearly $1 trillion.
New figures from the Property Institute and market data provider Valocity show a big jump in residential property values between 2015 and 2018.
The combined stock of residential housing in New Zealand is now worth $941,611 billion, up from $667,718b in 2015.
Tauranga’s houses jumped in value by more than 63 per cent over that period while Christchurch’s moved up 11.6 per cent.
Financial adviser Liz Koh said the increase would create a ‘‘wealth effect’’ psychologically.
‘‘When the value of property goes up people start feeling wealthy and spending more.’’
In Tauranga, people would be feeling ‘‘immensely’’ wealthy as values shot ahead.
‘‘Your mortgage doesn’t go up to the same extent, so your equity increases,’’ she said.
‘‘With that increased wealth people start thinking about booking an overseas trip and taking on another mortgage to do it.’’
Koh said it was important to take care. ‘‘It’s all just an illusion, really. Property values can drop.’’
People had been caught out in previous property cycles, she said, when values fell and those who had over-extended themselves were left more highly leveraged than they should be.
Banking commentator Claire Matthews said the overall value was less of an indication of the country’s wealth than the increase in value of an individual property.
‘‘If we build enough more houses the value of the housing stock would go up, even though the average value might go down a bit,’’ she said.
The data comes as research from Colliers International shows sentiment in the residential property market has improved.
A net positive 28 per cent of its respondents expected median house prices to increase over the coming year, up from 15 per cent three months ago.