Thursday news in brief
Thursday 18 May 2017
Life is busy and it’s easy to miss some of the stories that hit the news. So here’s a brief rundown of some of the stories that might have slipped by you this week…
Govt intervention needed to sort Auckland’s mess
There is no question that Auckland’s housing market is a “bubble” but it is not the fault of the construction industry, according to a new report by a professor of construction.
AUT professor John Tookey’s report suggests that the push to free-up more land for new housing is simply delivering large and expensive standalone homes – which are not what the market needs.
But the solution to the “huge mess” is a sticks and carrots governmental policy approach that compels market behaviour, he says. To this end, he recommends disincentivising property speculation and adopting incentives encouraging buy-to-let landlords to sell their properties
“We can’t leave matters to the free market and then continue to be stunned by the inconvenient fact that the market acts in its own best interests. Government policy to manipulate the housing commodity market will make the difference.”
Read more: Labour’s negative gearing policy regressive
Super City market has “normalised”
Doom and gloom predictions about Auckland’s housing market have not been accurate – rather it is still trucking on solidly but as a buyers’ market, one real estate head has said.
Century 21 national manager Geoff Barnett said the city’s market has merely normalised with the market now showing more realism and genuine sustainability.
"There have been a myriad of policies, plans, and players involved that have collectively ensured the delivery of a well-managed soft landing. This will help with underlying confidence going forward."
The days of quick sales and crazy prices have gone, Barnett said. “But real estate will remain strong in 2017, although the third and fourth quarter might get a little tighter with a general election and the likelihood of rising interest rates.”
Read more: Past the peak?
Property now NZ's largest industry
The property industry is the largest industry in New Zealand with a direct contribution to total GDP of $29.8 billion or 13%, which is higher than manufacturing, agriculture, and health, a new report for the Property Council reveals.
The property industry also grew by $11.7b over the 2007-2016 period. This accounted for 16% of GDP growth over that period, more than double the growth of any other industry.
The wider economic impact of the property industry is also significant, with a total contribution of $83.4b to the New Zealand economy.
Property Council chief executive Connal Townsend said the report confirmed that property is the backbone of New Zealand and that the industry creates prosperity, jobs and a strong economy.
Read more: NZ commercial market global star
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Property values around most of the country continued to increase in 2017 but the rate of growth has slowed to a crawl and sales have plummeted.
Further changes have been made to the government’s unreinforced masonry securing fund (URM Fund) which assists earthquake proofing work.
New Zealand’s lower economic growth was acknowledged by the Reserve Bank in its OCR statement today – which means there's a chance their next call could be more doveish.