Kiwi housing boom fades
Morning all,
http://www.stuff.co.nz/stuff/0,2106,3861042a13,00.html
http://www.stuff.co.nz/stuff/0,2106,3861042a13,00.html
Kiwi housing boom fades
15 November 2006
By JAMES WEIR
The property price boom is over, with an economic forecast that some areas such as Taranaki, Waikato and provincial Canterbury will see house prices fall in the next three years.
In 2004 - at the peak of the five-year boom - national average house prices rose about 18 per cent.
This year, house price gains slowed to less than 10 per cent, the slowest rate for three years.
A report from mortgage insurance group PMI and economists Infometrics out yesterday forecast a 0.9 per cent increase in national house prices in the year to June 2007, gaining a total of 7.2 per cent by 2009, but some areas would see prices dip.
Nationally, high debt levels and high interest rates are expected to slow the house market in the next six to nine months.
PMI Australia chief executive Ian Graham said the report showed the boom was over, and price rises would be much slower in regions such as Northland and Taranaki after big gains in recent years.
There would definitely be lower house price growth into 2007, he said.
AdvertisementAdvertisementPrices would not collapse and the slowdown would be reasonably orderly.
But the high level of household debt did make borrowers more vulnerable if they lost their job or their income fell, Mr Graham said.
"Their debt commitments seem under control, but it doesn't need too much to dislocate that."
In Australia, the property boom peaked in Sydney two years ago.
In some "first home" areas, house prices were down about 15 per cent from the top of the market, with the median down about 7 per cent. With forced sales, prices could be as much as 25 per cent down on the purchase price, he said.
The Australian property boom saw prices jump about 80 per cent, overshooting the market's long-run value, Mr Graham said.
New Zealand prices had risen about 60 per cent over a longer period. In most areas, house prices were not expected to fall, partly because rising construction costs would keep prices up.
Wellington house prices are expected to be flat in the next year, but improve a total of 7.5 per cent in the next three years - only 0.9 per cent better than inflation, the report said. A growing government workforce helped boost Wellington house prices in the past year, by almost 14 per cent.
The report forecasts average prices in Taranaki, Manawatu and Wanganui to fall slightly in each of the next three years, following huge gains in the past three years.
"With the exception of Manawatu, property in the region appears to be significantly overvalued and prices are forecast to fall 2.1 per cent on average over the next three years, down 8 per cent in real terms."
15 November 2006
By JAMES WEIR
The property price boom is over, with an economic forecast that some areas such as Taranaki, Waikato and provincial Canterbury will see house prices fall in the next three years.
In 2004 - at the peak of the five-year boom - national average house prices rose about 18 per cent.
This year, house price gains slowed to less than 10 per cent, the slowest rate for three years.
A report from mortgage insurance group PMI and economists Infometrics out yesterday forecast a 0.9 per cent increase in national house prices in the year to June 2007, gaining a total of 7.2 per cent by 2009, but some areas would see prices dip.
Nationally, high debt levels and high interest rates are expected to slow the house market in the next six to nine months.
PMI Australia chief executive Ian Graham said the report showed the boom was over, and price rises would be much slower in regions such as Northland and Taranaki after big gains in recent years.
There would definitely be lower house price growth into 2007, he said.
AdvertisementAdvertisementPrices would not collapse and the slowdown would be reasonably orderly.
But the high level of household debt did make borrowers more vulnerable if they lost their job or their income fell, Mr Graham said.
"Their debt commitments seem under control, but it doesn't need too much to dislocate that."
In Australia, the property boom peaked in Sydney two years ago.
In some "first home" areas, house prices were down about 15 per cent from the top of the market, with the median down about 7 per cent. With forced sales, prices could be as much as 25 per cent down on the purchase price, he said.
The Australian property boom saw prices jump about 80 per cent, overshooting the market's long-run value, Mr Graham said.
New Zealand prices had risen about 60 per cent over a longer period. In most areas, house prices were not expected to fall, partly because rising construction costs would keep prices up.
Wellington house prices are expected to be flat in the next year, but improve a total of 7.5 per cent in the next three years - only 0.9 per cent better than inflation, the report said. A growing government workforce helped boost Wellington house prices in the past year, by almost 14 per cent.
The report forecasts average prices in Taranaki, Manawatu and Wanganui to fall slightly in each of the next three years, following huge gains in the past three years.
"With the exception of Manawatu, property in the region appears to be significantly overvalued and prices are forecast to fall 2.1 per cent on average over the next three years, down 8 per cent in real terms."
for some people what you suggest is actually good advice, since they have vastly over extended themselves in the belief that capital gains easy streets forever. If they don't divest themselves of some of their portfolio shortly they may find themselves a bit close to the edge.
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