CoreLogic has released its August/September Property Market and Economic Update Report, which reviews the major factors affecting the housing market. It looks at sales volumes, values, buyer types and other influences.
It shows a large supply and demand imbalance when it comes to the creation of new housing stock for a growing population.
Over the year to June, there were consents issued for 30,538 dwellings, estimated to be able to house 65,952 people. But the population increased by 100,500 people.
Head of research in New Zealand Nick Goodall said that was something that was expected to hold prices up over the long term. He predicted prices would rise through next year.
Goodall said the only way that imbalance would not have an effect was if supply no longer mattered – if the market adjusted to the current number of dwellings, or if the new population coming into New Zealand were people who were willing to live with more people per household.
Goodall said the number of valuations run by banks considering issuing loans confirmed the end to winter 2017 had been bleak for the property market and the drop in turnover was likely to have continued through August.
“The already strong drop in sales volumes combined with market activity now ambling along at seasonally low levels up to 30 per cent below last winter tells us the market slowdown remains. Property value change is variable too, with some areas of New Zealand now showing value decreases.”
But rental growth was strong, with prices up 6.5 per cent year-on-year.
Goodall expected the sales market would change gears towards the end of the year.
He said it was likely that investors would find ways around the loan-to-value restrictions that had affected their ability to get loans and any hesitation relating to the election would pass.
“Leadership changes and variable poll results have created a volatile political environment, the uncertainty of which will be affecting some potential buyers. We also expect the reduced availability of credit to continue to affect demand.
“For these reasons, a prolonged slowdown, lasting towards the end of 2017 is anticipated. Ultimately however, even after taking affordability concerns in Auckland and elsewhere into account, strong fundamentals – including a positive economic outlook – remain. Property values could therefore rise again in the New Year: albeit at a more modest pace than the previous two.”
The proportion of first-home buyers in the market has levelled off at the same rate as before the first loan-to-value restrictions were introduced in 2013.
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