New Zealand's housing sector is under the international spotlight, for its undue valuations. A global housing survey conducted by the Economic magazine, rated the nation's housing as pricey and overvalued in the developed world.
The survey, conducted by the magazine, studied global house prices against the after-tax income of people and the rent values, reported NZ Herald.
It found New Zealand's housing market booming at the rate of 7.3 per cent since last year as the sixth fastest growing housing market in the 23 nations it surveyed.
The survey also rated housing in New Zealand as 74 per cent overvalued on the basis of rents. Only Canada with 76 per cent and Hong Kong with 79 per cent fared worse than that.
The survey assessed the price-to-rent and price-to-income ratios against long-term averages in confirming that whether they were overvalued.
New Zealand houses were expensive at both fronts. On the basis of rent, New Zealand housing was 30 per cent overvalued and was behind Canada (32 per cent), Australia (33 per cent) and Belgium (46 per cent).
Taking an average of all these measures, the Economist found houses to be 25 per cent overvalued in nine countries. In Australia, despite the slowing economy and rising unemployment, prices are up by 10.4 per cent, compared to last year.
The survey observed that the overshoot in these economies bore close resemblance to the conditions prevailed in America at the height of its boom before plunging to a crisis.
The Economist magazine noted that prior to the financial crisis of 2007-08 low long-term interest rates triggered an extraordinary house-price boom in the world. That bubble pricked in the crisis and came in the grip of recession.
In many of these economies, central banks' played a crucial role in perking up the recovery by pushing down long-term interest rates. As a result, house prices are rising in 18 of the 23 economies and in 8 of them, there is fast paced growth pace than three months ago.
In New Zealand, the Real Estate Institute figures show that the national median house price is at $416,000, marking a jump of 8.1 per cent on a year-on-year basis.