Auckland’s property market having shown rapid appreciation over recent years seems to have hit a lull, meanwhile other areas are flourishing which is fondly referred to as the ‘Auckland Halo Effect’ as people cash up in Auckland and move to the regions.
It appears that the usual surge in the housing market for this time of the year has failed to materialise with a recent report from a major real estate company suggesting sales volumes falling but prices holding up. Other major agencies have also reported volumes are down while prices remain stable. This appears in part to have been brought about by a general tightening by the banks particularly in relation to the investor market where various measures introduced relating to off shore investors, tax and deposit ratios have softened the market.
Fundamentally however the market hasn’t changed in that interest rates are still very low on a historical basis and not far off the lowest they have been in the 1960’s, although it would be fair to say that we are likely to see a gentle rise in the ensuing months. There is also record high migration which is supporting the demand for property and we have solid momentum in the New Zealand economy. Speaking of supply and demand Auckland building figures suggest a drop which is worrying given the surge in immigration and the existing shortage of supply in the Auckland market.
It has been suggested that it might be a good idea for potential buyers to take advantage of this lull in the market which may well be only a temporary thing while people are still in holiday mode given the recent public holidays and short weeks. Many economic and real estate commentators are saying that it’s too early to tell yet which way the market is going to go and we will need to wait for February’s figures. If the Auckland market does take off again we will inevitably see a response from the Reserve Bank in the form of debt to income limits which have already been put up for discussion.
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