Housing inflation

Updated: 16 September 2009

Low inflation in the housing sector continues; rents remain stable

Inflation in the housing sector is largely measured by movements in the ‘housing and household utilities’ group of the Consumer Price Index (CPI), and had been steady at about 5 percent per annum from the December 2005 quarter to the December 2008 quarter. However, housing sector inflation has slowed in 2009, and increased only 0.7 percent in the September 2009 quarter. This followed increases of 0.4 percent in the June 2009 and 0.3 percent in the March 2009 quarters. This has brought the whole-year sector inflation rate down to 2.1 percent in the year to September 2009 from 4.7 percent in the year to September 2008.

Annual inflation in the price of new housing has continued to slow since the March 2008 quarter. The September 2009 CPI data showed the increase in the price of new housing was 0.1 percent in the year to September 2009 compared with 4.62 percent in the year to June 2008.

Similarly, annual inflation for actual rents for housing has slowed since the September 2008 quarter. The increase in rent was 1.1 percent in the year to September 2009, compared with 3.1 percent in the year to September 2008. As shown in Figure 4, both annual inflation for new housing and rent have been tracking below annual general price inflation (as measured by the CPI all groups) since the September 2008 quarter.

Figure 4: Inflation measured by the Consumers Price Index (to September 2009) percentage change from same quarter of previous year.

Source: Statistics New Zealand