The media is seldom short of news pertaining to the real estate industry and the last few weeks have been no exception. Whilst we don’t possess a crystal ball to accurately forecast what lies ahead, if we can believe the media hype, it all points to a buoyant market full of opportunities for homeowners, investors, and even, with a ray of additional hope, for first-home buyers, perhaps through a further easing of the Loan to Value Ratios (LVRs). We repeat below some of the media articles we have noticed and also add some thoughts of our own, based on how Tommy’s is finding the market in the lead up to Christmas.
A press release on 15th October from the Real Estate Institute of NZ (REINZ) quoted “Median house prices across NZ increased by 6.6% in September to a record high of $597,000, up from $560,000 in September 2018. Median prices are lifting as a result of a number of influences such as the Official Cash Rate (OCR) drop back in August which is slowly injecting more confidence into the market and the continued lack of supply across many parts of the country. The number of residential properties sold across NZ in September increased by 3.3% from the same time last year to 5,896 (up from 5,708). This was the highest number of sales in the month of September in 3 years.”
Stuff Business News has also featured some positive comments recently from various market analysts and media commentators:
Under the banner, “Landlords in prime position as demand heats up for rental properties”, the article states: It’s a good time to be a landlord. The number of enquiries for rental properties on Trade Me is up 17% compared to the same time the year before. The national median rent advertised on the site rose 3.1% year on year to $495 per week. “It’s classic supply and demand, if the supply of rental properties can’t keep up with the demand then prices will invariably start to rise. In many parts of the country demand is easily outstripping supply and we’re seeing rent increases” said Trade Me Property spokesman Aaron Clancy.
Another posting on Stuff News and attributed to Infometrics, suggests prices could head back up despite an economic slowdown, “House prices could be rising at the rate of 8% a year by the middle of 2021”, economic consultancy Infometrics, has forecast. It believes the Reserve Bank will remove some chocks on the housing market by further watering down loan-to-value restrictions when it publishes its next Financial Stability Report next month (November). Infometrics also forecast the Government would announce new spending initiatives in December “to respond to increasing calls for more fiscal stimulus” in the wake of the $7.5 billion annual surplus the Treasury revealed.
Westpac’s economists are quoted as tipping house price growth to accelerate next year and they believe home prices could rise by as much as 7% in 2020. A similar suggestion was predicted in the Dominion Post’s business section on October 16th and appears to be an opinion shared by other prominent economists.
A small but pertinent newspaper column on Friday October 18th stated that “Investors were back into property”. To quote, “Bad news for first-home buyers; investors are back and are putting up a fight. The investors’ presence was being felt nationwide. Property investment was increasingly looking a good option for people struggling to get returns from term deposits, and first home buyers might now face more competition in the market.” In Tommy’s opinion, there is no doubt that the pitiful returns from the banks on term deposits and the like is a driving force in turning investors back to real estate.
From Tommy’s perspective, we are finding prices generally have held up over the winter months and we are not surprised by the constant media suggestions that prices will increase in the coming 12 months or so. There is a general air of positivity and if you are a property owner, the prospects of future capital gain appear to be strong. On the other hand, if you are a potential home buyer, whilst it is not easy to make that first move onto the property ownership ladder, is it ever going to be any easier? We doubt that it will be!
Buyers currently have the advantage of record low interest rates with the possibility of even lower rates going forward if the downward trend of the Official Cash Rate continues. Tommy’s has listed strongly over recent weeks and with more properties coming to the market in November we expect to have a good selection of property available pre-Christmas for home buyers and property investors. We invite buyers and sellers to call a Tommy’s agent and discuss the best ways and means of buying or selling in the prevailing market conditions and on the predicted rising market into and beyond 2020.