We’re in interesting times
To say these are interesting times in the residential property market is something of an understatement because so many different forces are at play. Although the new Government is determined to see housing become more affordable and is aiming to put the squeeze on speculators and overseas investors, there is only so much it can do.
That was highlighted by some comments from Barfoot & Thompson managing director Peter Thompson after returning from a global real estate symposium in Vienna.
“Rising house prices is an international phenomenon, and no country or market has tamed it or has an answer,” Thompson says.
“All the delegates reported their country was dealing with the exactly the same issues. The consensus opinion of delegates as to the key drivers for the rise in property prices was the ready availability of mortgage finance, the extended period of low interest rates and the switch the public has made to seeing residential property as a ‘safe haven’ rather than as an ‘investment’.
The Reserve Bank’s LVR restrictions and banks tightening their lending criteria have helped to cool the market, particularly in Auckland, but demand for housing remains strong where there are jobs and population growth.
Only time will tell how much of an effect the Government’s ambitious KiwiBuild scheme will have. The plan is to build 100,000 affordable homes in the next decade, half of them in Auckland.
With the Government threatening to compulsorily acquire land from landbankers and the prospect of a capital gains tax on the horizon, the market is in for a shake-up.
As Nick Goodall, head of research at CoreLogic, points out in his column below, the actions — not the squeals — of property investors will provide a pointer to the way the residential property market will head.