Big housing downturn predicted a third over two years, says economist
5:00AM Thursday November 15, 2007
By Anne Gibson
Auckland's residential property market is about to enter a "full-blown downturn" in sales activity over the next 12 months and won't recover for at least two years, says an economic forecaster.
Gareth Kiernan, senior economist at consultants and forecasters Infometrics, yesterday released a report showing Auckland was exhibiting early downturn symptoms and predicting they were about to get much worse. His report, prepared for PMI Mortgage Insurance, analysed the housing market up to 2010 and said the city was becoming less popular, with an oversupply of apartments and shakier housing demand.
"Weaker net migration is likely to lower Auckland's population growth to 1.3 per cent over the year to June 2008. A decline in immigration approval numbers will negatively affect the number of people arriving in Auckland, while faster economic growth in dairy-intensive regions such as the Waikato is likely to encourage people to continue moving out of Auckland," Mr Kiernan wrote.
"The early signs of a slowdown in house sales activity will develop into a full-blown downturn in the Auckland real estate market over the next 12 months."
Sales volumes would fall by nearly a third over the two years to June 2009, he predicted. Only by mid-2009 would the city's housing stock begin to recover but it would not return to the dizzy heights reached between 2002 and this year, he wrote.
The slowdown had been most noticeable in the North Shore andWaitakere areas.
Auckland residential building was at a 13-year low and was unlikely to decline much further. Many more houses would be built by 2010, driven by demand for traditional housing and townhouses, he predicted.
Ian Graham, chief executive of PMI Australia, said the housing market in New Zealand was in for a hard time.
The report's executive summary attacked the Real Estate Institute for dismissing changes to the national housing market lately as just the usual winter slowdown. Sales volumes in August were at their lowest since 2001, belying assertions from the institute.
Mr Kiernan predicted Auckland would suffer more than many other regions. Higher interest rates and slowing population growth had caused a big drop already but would bite even harder next year, he wrote.
Nationally, 105,532 houses were sold in the year ended June, but this would fall to 78,447 sales in the June 2009 year. House-price growth had accelerated earlier this year, but that upward momentum would fade by early next year. Real Estate Institute data out last week showed the national median fell slightly in the last month, from $351,500 to $350,000. But the number of days taken to sell houses and sales volumes - the two key indicators which economists study harder than prices - have worsened in the past few months.
BNZ chief economist Tony Alexander has also reported overwhelmingly negative sentiment in the real estate sector.
KEY FINDINGS
* Auckland house prices rose 13 per cent in the year ended in June
* Now the city is tipped to be entering a price slump, lasting until about 2010
* Infometrics says North Shore has led the price growth but will now be a big victim
* It predicts Auckland sales volumes will plummet 26.6 per cent in the next two years
5:00AM Thursday November 15, 2007
By Anne Gibson
Auckland's residential property market is about to enter a "full-blown downturn" in sales activity over the next 12 months and won't recover for at least two years, says an economic forecaster.
Gareth Kiernan, senior economist at consultants and forecasters Infometrics, yesterday released a report showing Auckland was exhibiting early downturn symptoms and predicting they were about to get much worse. His report, prepared for PMI Mortgage Insurance, analysed the housing market up to 2010 and said the city was becoming less popular, with an oversupply of apartments and shakier housing demand.
"Weaker net migration is likely to lower Auckland's population growth to 1.3 per cent over the year to June 2008. A decline in immigration approval numbers will negatively affect the number of people arriving in Auckland, while faster economic growth in dairy-intensive regions such as the Waikato is likely to encourage people to continue moving out of Auckland," Mr Kiernan wrote.
"The early signs of a slowdown in house sales activity will develop into a full-blown downturn in the Auckland real estate market over the next 12 months."
Sales volumes would fall by nearly a third over the two years to June 2009, he predicted. Only by mid-2009 would the city's housing stock begin to recover but it would not return to the dizzy heights reached between 2002 and this year, he wrote.
The slowdown had been most noticeable in the North Shore andWaitakere areas.
Auckland residential building was at a 13-year low and was unlikely to decline much further. Many more houses would be built by 2010, driven by demand for traditional housing and townhouses, he predicted.
Ian Graham, chief executive of PMI Australia, said the housing market in New Zealand was in for a hard time.
The report's executive summary attacked the Real Estate Institute for dismissing changes to the national housing market lately as just the usual winter slowdown. Sales volumes in August were at their lowest since 2001, belying assertions from the institute.
Mr Kiernan predicted Auckland would suffer more than many other regions. Higher interest rates and slowing population growth had caused a big drop already but would bite even harder next year, he wrote.
Nationally, 105,532 houses were sold in the year ended June, but this would fall to 78,447 sales in the June 2009 year. House-price growth had accelerated earlier this year, but that upward momentum would fade by early next year. Real Estate Institute data out last week showed the national median fell slightly in the last month, from $351,500 to $350,000. But the number of days taken to sell houses and sales volumes - the two key indicators which economists study harder than prices - have worsened in the past few months.
BNZ chief economist Tony Alexander has also reported overwhelmingly negative sentiment in the real estate sector.
KEY FINDINGS
* Auckland house prices rose 13 per cent in the year ended in June
* Now the city is tipped to be entering a price slump, lasting until about 2010
* Infometrics says North Shore has led the price growth but will now be a big victim
* It predicts Auckland sales volumes will plummet 26.6 per cent in the next two years
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