‘Recovering’ housing market tipped toboom
REAL ESTATE agents believe more investors and firsthome buyers are entering a strengthening housing market, according to the latest BNZ-REINZ Residential Market Survey.
The results come amid predictions of another housing boom underway and a big hike in year-on-year sales.
BNZ chief economist Tony Alexander says the survey shows a further firming in all measures of market strength, including fewer prospective vendors seeking property appraisals.
‘‘More investors and first-home buyers are perceived by responding agents to be entering the market and a strong net 18 per cent of agents consider that we are now in a sellers’ market.
‘‘This is a situation likely to persist well into 2014 given the worsening shortage of stock and likely persistence of low-financing costs for a long period of time.’’
Mr Alexander attributes the stock shortage to a lack of builders, high council costs, an inefficient building-materials sector, higher building standards and buyer preference for custom-build homes.
He believes the country is in the early stages of a ‘‘particularly strong cyclical upturn’’, with Auckland leading the way.
‘‘How long will it take for the Auckland boom to spread to the regions?’’ he asks in his latest weekly newspaper column.
However, the Real Estate Institute of NZ is not as convinced.
‘‘Buyers and sellers lost confidence during the global financial crisis and, in that context, the current the market should be seen as recovering rather than ‘booming’,’’ REINZ chief executive Helen O’Sullivan said when releasing the latest monthly sales data.
It shows sales for June were up 17.3 per cent year-on-year and prices have climbed 3.3 per cent since the previous June.
Last month also notched up a record median price: $372,000.
‘‘Keen buyer interest in Auckland and Christchurch – which together make up about half of national activity – drove the New Zealand real estate market to new highs in June and a new record median price,’’ Ms O’Sullivan says.
‘‘The overall pattern for the rest of New Zealand shows improvement in sales volumes, with prices on the whole steady rather than up.
‘‘The constraint across the country appears to be shortage of properties available to meet buyer demand. This is most acute in Auckland, where new home building is still sluggish, and in Christchurch where the earthquake recovery is slowly getting under way.’’
The BNZ-REINZ July survey of more than 10,000 licensed real estate agents recorded increases in all but one of the eight measures it tracks each month: the net percentage of agents receiving more requests for appraisals.
‘‘That measure has decreased to a net negative 13 per cent saying they are receiving more requests from -0.8 per cent in our June survey,’’ Mr Alexander says.
‘‘That means decreasing supply at the same time as measures of demand are rising. For instance, a record net 27.9 per cent of agents say they are noticing more investors in the market, while 44 per cent – up from 40 per cent in June – say they are seeing more first-home buyers.’’
Mr Alexander says conditions have ‘‘switched around decidedly’’ toward being a sellers’ market, with a record net 18 per cent of agents feeling buyers are more motivated than sellers.
‘‘The combination of rising demand, easing supply, and sellers holding the power suggests little other than prices rising – hence a net 41.1 per cent of agents reporting that is exactly what they are observing.
‘‘With interest rates set to stay low for this year and perhaps all of next while economic growth continues at a reasonable if unexciting pace, New Zealand’s residential property market is likely to remain in its sellers’ market phase at least well into 2014.
‘‘Beyond that depends very much upon what at this stage are unpredictable interest rate rises further out, and by how much dwelling supply can grow in an environment where builder shortages seem certain to appear.’’
Other survey results also indicate a strengthening market.
For instance, a net 26 per cent of agents noticed more people attending open homes, up from a net 13 per cent in May – ‘‘and a sign that buyers are out in force’’, Mr Alexander says.
Similarly, more people are completing their purchases; there is no longer a tendency for buyers to pull out of initial offers.
A record net 28 per cent of agents perceive auction clearance rates to be rising and a net 13 per cent are receiving fewer requests to appraise properties (compared with 1 per cent in May).
‘‘The movement of this measure back firmly into negative territory is suggestive of vendors feeling in no particular hurry to list their properties and accords with the growing anecdotal feedback of listings being in short supply,’’ Mr Alexander says.
‘‘A net 41 per cent of agents feel prices are rising and actual price gauges are decidedly going up.’’
A net 28 per cent of agents noticed more investors in the market.
‘‘This is a record level, up slightly from 27 per cent in June, and we believe part of the recent jump in investor demand reflects the falls in interest rates of almost two months ago,’’ Mr Alexander says.
‘‘A high net 44 per cent of agents report more first-home buyers in the market.
‘‘This indicator has been at strong levels since the start of the year and is likely to remain high as awareness grows of rental property shortages in some areas,’’ he says.