Wellington has climbed to number two in the world in a list of the cities with the fastest-rising house prices.
Wellington’s prices rose by 33.5 year-on-year per cent in the third quarter of this year, according to international property consultancy Knight Frank’s,latest Global Residential Cities Index.
That took it to second place in the rankings, up from the 13th spot last quarter when it recorded increases of 24.7 per cent.
Early last year it was ranked at number 32 with price increases of 7.6 per cent, but by the first quarter of this year it was in third place with increases of 30.1 per cent.
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While price rises dropped back in the second quarter of this year, they have picked up pace again, and only the Turkish city of Izmir recorded a bigger price increase, at 34.8 per cent.
Phoenix, Istanbul and Seoul rounded out the top five, and Darwin (which was number nine) had the largest increase in annual price change since the start of the pandemic.
Auckland was well behind Wellington in the rankings, at number 25 with increases of 21.1 per cent. That was up from last quarter when it was number 35, but down from the first quarter when it was at 11.
Of the Australian cities, Hobart, Canberra, Darwin and Sydney were all ranked above Auckland.
Knight Frank researcher Kate Everett-Allen said prices were rising at the fastest rate since 2005, and were up in 93 per cent of the 150 cities tracked in the index.
Forty-four per cent recorded increases above 10 per cent, and on average prices increased by 10.6 per cent.
Prices had been pushed higher by government stimulus, savings accrued during lockdowns, a pandemic-induced reassessment of lifestyles as well as low interest rates, she said.
“What happens next depends on the speed at which interest rates start to rise, the impact of omicron and the stickiness of higher inflation, which could reduce disposable incomes and lead to weaker buyer sentiment.”
Despite Wellington’s ascendancy in the rankings, there were signs the tide was turning for New Zealand’s housing market.
Prices were still up nationwide in the latest figures from the Real Estate Institute, but sales volumes were down and listings were up.
According to commentators, the rate of price increases has slowed, and the market has passed its peak. Economists have also started to revise their price forecasts down.
Bayleys national director residential Johnny Sinclair said there was still a huge amount of momentum in the market, but some headwinds had emerged recently.
These included rising mortgage rates, banks adopting tighter lending criteria, and buyers heading away early for the Christmas holidays.
In the new year, the high-end market for properties above $2.5 million was expected to remain robust due to high equity levels among those buyers, he said.
“But some pressure Is likely to come off properties below $1.3m as buyers at the lower end of the market tend to be more reliant on bank funding. We are also expecting buyers to become more selective about properties.”
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