The Trump effect hits Palmerston North
United States President Donald Trump may be the saviour firsthome buyers in New Zealand need to get on the housing ladder, an academic says.
The latest Quotable Value statistics show New Zealand house prices rose by 12.9 per cent in the year to March. While Auckland’s value growth was under the national average at 12.3 per cent, Palmerston North – a city that usually has soft house-value growth – grew by 14.8 per cent. Other regional areas like Nelson, Hastings and Napier also experienced strong growth.
Massey University economics and finance senior lecturer Dr Susan Flint-hartle said the combination of a strong economy and an election year, a time when any sitting government would not want values to fall, meant prices would likely carry on their upwards trend. However, external forces like the Trump administration could have an impact. ‘‘If he did something really weird – he is very protectionist – it could have an impact on trade income. Most of [the growth] has been in Auckland, but it is definitely getting out to the provincial areas.’’
Research showed Auckland’s housing bubble created a ripple effect to nearby places like Hamilton and Tauranga, but there was a possibility the ripple was also making it further afield to places likes Palmerston North, she said. ‘‘It seems logical the ripple will get wider as people realise they can afford a reasonably nice house in places further afield.’’
A big issue was the baby boomer generation buying houses as investments to ensure they had an income through retirement, shown by the fact 44 per cent of Auckland house sales in the past year went to investors. ‘‘If you’re in your mid-to-late 20s, it’s such a hard time.’’
New Zealand’s migrationfuelled population growth would have to slow, and interest rates rise, for there to be a drop in house prices. ‘‘But migration is not going to stop because we are in a global world.’’
The aftermath of Brexit, with negotiations having to take place with the European Union and United Kingdom over new trade deals, may also see the economy weaken, she said.