Property

Capital price prospects

It is Wellington, not Auckland, which is set to offer some of the best house price prospects in New Zealand, an economist has suggested.

Tuesday, April 19th 2016

Economic research company, Strategic Risk Analysis Ltd, has just released an analysis of the housing market and it claims that reports of Auckland’s price rises and falls are misleading.

In the “Raving”, managing director Rodney Dickens said it is not changes in actual prices which are the main driver behind Auckland house price movements.

A quick look at the past behaviour of the Auckland median price shows the fall between September 2015 and January 2016 is no different to past temporary tumbles that have been followed by spikes, he said.

“Spikes and tumbles in the reported Auckland median dwelling price reflect normal behaviour and will be the result of changes in the composition of sales between higher-priced and lower-priced properties.”

Further, the price changes were also not related to the tax and LVR measures introduced late last year in a bid to calm the Auckland market.

In Dickens’ view, the behaviour of the number of sales in recent months more accurately reflects the impact of the policy changes.

He said the number of sales in Auckland has been bouncing around in recent months after falling sharply following the policy changes, with sales in March 2016 still 21% below the September 2015 level.

“There are reasons to expect sales to improve in Auckland and the upper North Island over the next several months but, for now, the policy changes are still having a significant negative impact on demand in these two areas.”

Assessment of house price prospects comes down to comprehensive analysis of the demand-supply balance of the market in question, Dickens said.

“The Auckland market has gone from an extremely strong demand-supply balance to a balance that is still supportive of house prices increasing at somewhat above a 10% annual rate in the near-term.”

However, he believes that Wellington currently has one of the most interesting housing markets in the country.

This is based on an improving demand-supply balance and prices being cheap on a relative historical basis.

Also, Wellington is poised to benefit from stronger economic growth than predicted by Treasury and economic forecasters when the government goes from purse tightening to increasing spending.

Dickens said the housing booms which have been fuelling local economies and job creation in upper North Island regions should spread further afield this year, especially to Wellington.

This will help fuel stronger consumer spending growth than bank economists are predicting and, in turn, the GST tax take.

Combine this with investors searching for better value and greater capital gain prospects than are available in the Auckland market – and the Wellington housing market will benefit.

 

Comments

No comments yet

Most Read

SBS FirstHome Combo 4.29
Unity First Home Buyer special 4.29
Co-operative Bank - First Home Special 4.85
China Construction Bank 4.85
ICBC 4.85
TSB Special 4.89
Kiwibank Special 4.89
ASB Bank 4.89
Westpac Special 4.89
BNZ - Std 4.89
AIA - Go Home Loans 4.89
Nelson Building Society 4.93
ICBC 4.95
SBS Bank Special 4.95
China Construction Bank 4.95
Wairarapa Building Society 4.95
TSB Special 4.95
ANZ Special 4.95
ASB Bank 4.95
Kainga Ora 4.95
Westpac Special 4.95
AIA - Go Home Loans 4.95
SBS Bank Special 5.39
Westpac Special 5.39
ICBC 5.39
Co-operative Bank - Owner Occ 5.59
BNZ - Std 5.59
BNZ - Classic 5.59
AIA - Go Home Loans 5.59
ASB Bank 5.59
Kainga Ora 5.69
Kiwibank Special 5.79
ANZ 5.79
SBS Construction lending for FHB 3.94
AIA - Back My Build 4.44
CFML 321 Loans 4.99
Co-operative Bank - Owner Occ 5.95
Co-operative Bank - Standard 5.95
Heartland Bank - Online 5.99
Pepper Money Prime 6.29
Kiwibank - Offset 6.35
Kiwibank 6.35
TSB Special 6.39
ASB Bank 6.44

More Stories

Four decades of 6-7% yearly house price growth ending

Friday, March 21st 2025

Four decades of 6-7% yearly house price growth ending

New Zealander’s reliance on property capital gains in the mid-single digits is at an end.

[TMM Podcast] Yelsa serves up “marine reserve” of property buyers

Friday, January 31st 2025

[TMM Podcast] Yelsa serves up “marine reserve” of property buyers

It’s been years in the making and former real estate agent Mike Harvey is now coming to market with his platform matching buyers and sellers, an offering he says will be a gamechanger for the industry.

Leaving last year's stumbling housing market behind

Friday, January 17th 2025

Leaving last year's stumbling housing market behind

As interest rates ease and job losses climb, New Zealand’s housing market faces a mixed year of modest growth, with conflicting forces shaping the outlook for homebuyers and investors.

Don’t bet on house prices rising faster than incomes

Wednesday, January 15th 2025

Don’t bet on house prices rising faster than incomes

Former Reserve Bank Governor and National Party leader Don Brash says there are grounds for believing that house prices may finally have ended the three-decade period when they rose significantly faster than incomes.