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  1. #1
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    Default New Zealand Market - comment

    Hi Guys

    Comment on the NZ market from the IPR Newsletter.

    New Zealand Market

    For some months now many experts have been predicting the New Zealand market to slow and begin a general fall in prices that will likely last 2 – 3 years. However, the market has been proving to be more resilient than many expected with prices continuing to rise in many areas this year. July was the first month where prices did drop in most areas and across the country as a whole, and quite likely signals the start of a sustained flat period where many areas will see prices falling back. The reasons for this are clearly illustrated historically. When we look at some of the major factors that have tended to significantly impact house prices in New Zealand, we see they are all tending negative at present.

    Migration numbers have again dropped significantly after holding up for a few months. We are heading for negative growth again fairly soon. In July the number of immigrants was down 8% from a year earlier, whereas the number of emigrants was up by 19.5% Annual numbers arriving are now around 78,500 (down from 98,700 two years ago) while those leaving stands around 71,600 (up from 54,700 two years ago).

    nterest Rates have of course risen quite significantly over the last 18 months and historically prices fall whenever this happens. Most have not ruled out more rises after the election.

    The election itself tends to have a slowing or stalling effect on prices, although with both parties promising big handouts, most people should see some increase in their in-the-hand income and should think seriously about using this windfall to fund property investment for their retirement.

    Construction costs are also on the rise. Statistics NZ data shows that constructions costs rose by 9.8% for the year ended 12 months ago and a further 7.6% over the last 12 months.

    All of these factors combine to suggest not many areas in NZ will be attractive for investors over the next few years. Our recommendation for the NZ market in times like this comes back to the Auckland region being the soundest option for the medium term investor, as it gets most of our population growth, has a real land shortage problem and has a higher than average percentage of people renting. For information on current Auckland options, starting from $200,000, please contact your Consultant.
    Regards
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx


 

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