new zealand statistics

Southern house prices will fall in the next two years as the population drops, according to a report prepared by economic analysts Infometrics.

The report, for PMI Mortgage Insurance, says property in Southland and Otago has become overvalued. While prices were likely to rise 20 percent for the year ending in June, they would fall 10 percent in the following two years to June 2006.

Southland’s population grew just 0.3 percent between June 2001 and June 2003 while Otago, including the Wakatipu, gained 1.2 percent in the same period.

Overseas migrants inflated the Southland population but there was still a net outflow of people moving to other provinces, mostly Otago and Canterbury, the report says.

House sales seemed to be at a peak. Southland, which was one of the first areas to recover from the sales slump in 2000-01, was showing the earliest signs of slowdown now.

House price growth in Southland peaked at 45 percent per annum last year but had slipped back to 20 percent per annum by February this year.

“For the region as a whole, we predict that average house prices in June 2006 will be at a similar level as they were in September 2003.”

The number of properties sold in Otago and Southland had been exceptionally strong in the past three years but that was not likely to continue, the report says.

Infometrics predicts a 30 percent drop in sales in the two years to June 2006, with the slump most keenly felt in Southland.

New houses were being built in Southland and Otago faster than the national average but that was about to change, according to the report.

The number of new dwellings being built would fall as the population declines.

Annual consents for new dwellings would fall 45 percent across Otago and Southland between next month and June 2006, the report says.

That compared with a predicated decline of 26 percent across the whole country during that time.

Rental properties were returning less to their owners – gross yield rentals were down from 9.8 percent in October 2002 to 7.4 percent in January – while being worth more, which suggested real estate in the region had become overvalued, the report says.