Brian Gaynor Blog

The median house price hit a record high of $355,000 in October according to the Real Estate Institute of New Zealand. This compares to the median price of $350,000 in September and the previous record high of $351,500 in September 2007. 

House prices are rising again because banks have more confidence in residential property, particularly compared with business. Business credit is now contracting on an annualised basis while agriculture lending growth has slowed dramatically. 

Banks favour housing because there are fewer non-performing loans in this area. Corporate impaired loans have risen from 0.2% to 1.2% of loans over the past twelve months whereas impaired residential mortgages have increased from 0.1% to just 0.5% over the same period.

Banks believe that housing loans are less risky in a difficult economic environment.