Why Are New Zealand House Prices So High

Why Are New Zealand House Prices so High?

Buying a house in New Zealand is a lifelong dream for many young people, but often they find buying one out of their budget. Property prices in New Zealand are among the highest in the world with increasing prices in recent years. Many people are asking why house prices in New Zealand are so high compared to other countries?

Factors That Affect New Zealand House Prices

There are a number of factors that can affect house prices in New Zealand, ranging from the demand for housing, interest rates, tax policies and construction costs. For example, since the Global Financial Crisis in 2008, there has been an increased demand for housing which has driven up house prices in New Zealand. Interest rates have been historically low for over a decade, making it easier for people to borrow and spend more on housing. Tax policies such as negative gearing have encouraged investors to buy more properties, pushing up prices. Finally, the cost of constructing a house in New Zealand is also substantially higher than in other countries due to its isolation and level of construction skills.

Impact of Foreign Investment on Property Prices

Foreign investment has been a contentious issue in New Zealand, as it can affect the costs of housing. Foreign buyers are often seen as driving up prices, making it difficult for locals to purchase a house. Studies show that foreign investors in New Zealand usually purchase properties for rental income, as opposed to buying a house to live in. This has the effect of driving up rental prices as well, eroding the amount of income locals have available to save for a deposit or house purchase.

Environmental Protection and New Zealand House Prices

New Zealand is renowned for its pristine natural environment, so environmental protection policies can also play a role in increasing prices. The government has implemented zoning laws to restrict construction of homes in certain areas and protect forests and coastlines. This means that land for building homes is in finite supply and can increase prices. This can be seen in areas like Auckland, where only a limited number of homes can be built due to zoning restrictions, creating a shortage which can push up prices.

Income Inequality and House Prices

Income inequality can also play a role in house prices in New Zealand. Studies have shown that households with high levels of income are able to purchase more expensive homes, pushing up prices for those on lower incomes. This gap is further widened by the government’s tax policies, such as negative gearing, which makes it easier for higher income households to purchase multiple properties, effectively locking out lower income households from the housing market.


In conclusion, there are a number of factors that can affect the cost of housing in New Zealand. These include demand, interest rates, tax policies, foreign investment, environmental protection and income equality. While these factors can contribute to increasing house prices in New Zealand, it is important to remember that housing affordability is a complex issue and needs to be addressed in a holistic manner.

Government Policies and Intervention

The government has implemented policies to try and improve housing affordability in New Zealand. These include tax exemptions for first and low-income homebuyers, as well as subsidies for building new homes. The government has also been investing in social infrastructure such as public transport, roads and access to education to try and make cities and towns more attractive places to live, thereby increasing housing demand and pushing up prices.

Alternative Solutions to New Zealand House Prices

Alongside government involvement, there are other measures that can be taken to improve housing affordability. Building regulations and zoning restrictions can be relaxed or changed to allow for more homes to be built in certain areas, helping to increase the available housing supply. Other solutions such as shared ownership schemes, rent-to-own agreements and co-owning properties can also help to make housing more accessible to first and low-income homebuyers.

Challenges in Housing Affordability in New Zealand

It should also be noted that there are some challenges to increasing housing affordability in New Zealand. One of these is the skills gap in the construction sector, as there is a shortage of skilled labour which can make it difficult to build new homes. There are also regulatory and zoning conditions which can negatively impact on housing affordability as they can reduce the amount of land available to build on and increase building costs.

Adding Value with Home Improvements

Finally, it is important to remember that homeowners can add value to their properties by making improvements. For example, adding a deck or patio, landscaping or updating a kitchen can all increase the value of a home and push up its sale price. This can be a great way for homeowners to add value to their property and potentially increase their equity.

Valarie Bristol

Valarie B. Bristol is a passionate writer and researcher from New Zealand. She is committed to sharing her knowledge and love of New Zealand with the world. In her free time, Valarie enjoys exploring the countryside and taking pictures of the beautiful landscapes that make up the country. She also loves spending time with her family and friends, cooking, and reading.

Leave a Comment