Nowadays, many things are increasing in price. One area in which prices often increase is the real estate market. One of the reasons for the increase in house prices is the increased demand for urban housing. In areas where there is easy access to necessary services such as healthcare and supermarkets, house prices are much higher (especially when compared to rural areas). In this blog, we are going to look at one of the countries most affected by these changes, namely New Zealand. We will explore the numbers, the scale of increase and reasons behind the change in house prices.
If we look at the previous two months alone, we can see that from December to January the average house price has, for the first time, reached $800,000. In December 2020, the average price for a house was $788,967. In January, this increased to $806,151. The largest increase in a single district was seen in the Thames-Coromandel District. In this district there has been a $39,290 increase in the average house price to $904,897.
One of the main reasons for New Zealand’s real estate boom is the healthy expansion of their economy. This is closely linked to migration changes within New Zealand. As the economy rises, more people will want to live in the cities that offer well-paying jobs, therefore making the demand for housing in those areas increase. As the demand for housing increases, the price also increases.
The main benefit of the increase in house prices is the increase in the wealth of homeowners. As people’s houses increase in price, the potential for profit also increases. This means that the government will receive more tax due to houses being bought and sold at higher prices. In summary, these changes will, over time, directly improve the country’s GDP, thereby increasing the nation’s economic strength.