colinrealestate

The election has been and gone, we know the result, and it is business as usual with a pro-business Government rather than a ragtag of tax raising parties.
Does this matter for the housing market?
No capital gains tax is a positive, and the outright majority to National increases the chances of more red tape being removed from the Resource Management Act. Mainly however, the simple passage of a period of high uncertainty means we will soon get a clearer picture of the true state of the real estate market.
The NZ Property Report data shows that Auckland average sales prices were 12.3% ahead of a year earlier and have risen 2% in the past three months so gains continue apace even with election uncertainty. That supports our view of a market still rising under the influence of property shortages. The media make it clear that property listings remain in short supply and we would theorise that one reason for this is high awareness of the on-going property shortage in our two biggest cities making people unwilling to sell – and keen to buy more
But what about the rest of the country?
There we have a positive and negative to factor in. Dairy prices continue to fall and with a rising chance that the dairy pay-out this year might conceivably be below $5.00 the dairy-dependent parts of the country are going to suffer more than we were thinking just two weeks ago. The positive however, is that reduced prospects for Regional growth mean that the Reserve Bank might not make their next interest rate increase until well into 2015. Thus there will be less interest rate restraint on the market than we were thinking.
If you are quick off the mark you may have made an interesting logical leap here. Less high interest rates benefits all markets. The diary decline however, mainly hits the Regions. Overall, Christchurch and Auckland receive a net benefit! Of course the entire picture would change dramatically if either Ebola hits Western Countries, or the democracy protests in Hong Kong produce a bloody crackdown which would shatter Asian confidence and export demand for our products.
High uncertainty continues internationally. But barring either these two shock scenarios the still accelerating migration boom for New Zealand, lowish interest rates by the standards of all but our youngest buyers, property shortages, and good jobs growth means in many but certainly not all parts of New Zealand, the housing market will remain firm.
As a final note, its pays to note that in Australia rules on housing finance and perhaps purchasing by foreigners are on the cusp of being tightened. This could lead to the diversion of some buyers to our market over the coming year. Worth keeping an eye on given that one factor driving higher Chinese buying of New Zealand and Australian property (anecdotally speaking as there are no numbers) was the imposition of high stamp duties for foreigner buying some time ago in Singapore and Hong Kong.

Filed under: REAL ESTATE