By Leith van Onselen
The New Zealand housing market appears to be getting out of control.
Amid rapid price growth, particularly in supply restricted Auckland and Christchurch:
Increasing mortgage debt:
Rising average mortgage size:
And near record low inventory:
Young Kiwis are now raiding their retirement accounts – known as Kiwisaver – in order to get a foothold in the housing market. From Interest.co.nz :
Soaring numbers of young Kiwis are now raiding their retirement savings to climb into a rapidly inflating housing bubble.
…close to 11,000 young New Zealanders had cashed in KiwiSaver retirement savings to buy houses in the past year…
[Kiwisaver] has provided NZ$217.6 million of people’s own savings and government grants towards the purchase of a first home.
…as the RBNZ tries to play catch-up with the rising housing market and ensuing inflation, who will suffer most? Why the people who grabbed every cent they could and put it into a first home of course. They will be the ones most slugged by higher interest rates…
As noted last time , New Zealanders already hold a disproportionate amount of their wealth in housing (see below IMF charts).
Therefore, diverting even more financial resources into housing risks an even bigger fallout in the likely event that the housing market one day experiences a painful correction.
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