New Zealand has provided Australia’s property experts with a test case this year, following the 

central bank’s decision to move early with rate rises in an effort to combat rising inflation and a runaway housing market.

As one of the first developed economy nations to lift rates, the Reserve Bank of New Zealand (RBNZ) announced a 25 basis point rise in October 2021, the first increase in the official cash rate (OCR) in seven years.

Well ahead of Australia in its rate tightening cycle, the RBNZ has increased the OCR seven times from an historic low of 0.25% to 3% following its most recent 50 basis increase at the August meeting.

Due to its early lead, New Zealand’s strategy, and its impact on the housing market, has been

considered a ‘blueprint’ for many market observers and fellow commentators, CoreLogic NZ Chief Property Economist Kelvin Davidson said.

On a special NZ Property Market Podcast episode, Mr Davidson and co-host Head of Research Nick Goodall invited their Aussie counterparts CoreLogic Research Director Tim Lawless and Head of Research Eliza Owen to discuss the market differences between the two countries.

Up for discussion was the rampant COVID-era property price surges, affordability impacts and

regulatory differences.

“NZ has been held up as a canary in the coal mine and people are looking to us as the precedence setter for inflation and monetary policy and what happens in the housing market,” Mr Davidson explained.

Australia vs NZ 

At a macro level, Mr Lawless said Australian house prices increased 26% through the pandemic with more significant growth of 42% in regional markets from trough through to peak.

“Just like New Zealand we’ve seen extreme growth through the cycle, which has largely been driven by a combination of incentivising monetary policy, low interest rates and fiscal policies as well such as JobKeeper, JobSeeker and HomeBuilder, which amplified the building sector,” he said.

“Across the capital cities Sydney peaked in January and has already fallen -5.2% to the end of July, Melbourne peaked in February with values down -3.4%, with a softer growth cycle due to more disruption from long and more frequent lockdowns.”

Sourec:  CoreLogic