So this week we have experts predicting a crash, reporters reporting record asking prices, economists suggesting the markets have softened and more reporters touting the soaring property prices.
Asking Prices At Record Highs.
Web site Realestate.co.nz says house sellers’ average asking price last month was at record levels.
Buyer interest is still high with traffic numbers to the site up and there are more than 40,000 available houses for sale nationally.
Sellers’ national average asking price was $483,524, only marginally below the record set in March of $484,263. In Auckland, the average asking price was $685,246, almost the same as the new record set in April of $685,426.
In Wellington the average asking price in May was $453,850, while Canter
Property Crash On It’s Way
However just a few days earlier it was reported that there is evidence that the market has softened…..
Evidence is accumulating that the housing market has turned. Is it a temporary hiccup caused by the Reserve Bank’s imposition of restrictions on high-LVR lending and higher interest rates, with the market set to soon rebound to new highs? Or is it the beginning of a crash?
The housing market is a tricky thing to predict, but the truth probably lies somewhere in the middle.
Let’s examine the evidence that things are slowing. REINZ data shows national house sales are running around 12 per cent lower than a year ago, and nearly 14 per cent lower in Auckland. House price inflation tends to follow sales with about a three month lag, so it is not surprising that QV data shows annual house price inflation has steadily eased since its peak of 10 per cent in December last year, and the monthly numbers show prices have all but stopped rising. In addition, the value of mortgage approvals is now declining, according to Reserve Bank data.
OCR Continues To Rise
In support of the above article research is suggesting that even though a rate rise will occur (and it did) it may not need to be a significant lift as prices had started to soften.
There is solid support from the NZ Institute of Economic Research’s monetary policy shadow board for another rise in the official cash rate tomorrow, but it is less emphatic than it was six weeks ago.
Before every OCR review, the NZIER asks a panel of nine economists and businesspeople what they think is the appropriate level for the rate.
The results are combined to give a collective view of what the Reserve Bank should do.
This time the average recommended rate indicates 60 per cent backing for a third successive rise in the OCR, to 3.25 per cent.
But compared with the previous review in April, the support for other rates is more skewed to the downside.
“The domestic economy is strengthening and is taking more regions and industries along for the ride,” said NZIER economist Kirdan Lees.
Property Prices Soar
And yet on the same day another reported shouts that property prices soar….
Auckland’s housing stock shortage continues to cause havoc for prospective buyers, with the latest property figures revealing a sharp jump in prices in the city over the last 12 months.
The Harcourts Northern Region Market Watch compared sales figures from last month and 12 months earlier for Auckland and Northland.
While the number of written sales over the two regions dropped nearly 7 per cent, the average sales price jumped 12 per cent from $619,136 to $696,047.
Harcourts chief executive Hayden Duncan said Auckland’s buoyant housing market was the dominant factor behind the sharp increase.
“It continues to be driven by the fact that people need somewhere to live and we’ve got a population that continues to grow and a housing stock that isn’t able to accommodate them,” he said.
So over all mixed messages coming through the media.
I believe the only way to really know is to go out there and try to buy something, you will pretty quickly get an understanding of the market.