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Why house price growth will continue

Tuesday 28th of January 2020

In his latest note to the market, the former BNZ chief economists points to a market fundamentals that will keep house prices rising through 2020.

"Net migration numbers are strong and only slowly falling," Alexander said. 

"Interest rates look like staying low for ages. The jobs market is strong. Consumer confidence is good. Export commodity prices are firm. World growth looks okay if unspectacular. Fiscal policy is easing. Capital gains tax plans got squashed.

"Rents are rising strongly, especially at annual review time now. Airbnb is taking up more housing stock," he added.

Advisers and market commentators predict a strong start to 2020.

According to the latest REINZ data, December was the busiest final month of the year for house sales for three years.

The REINZ House Price Index increased by 6.6% nationwide last year.

Alexander believes house price inflation is increasing across the country, with the exception of the centre stretch of the North Island, and top of the South Island.

He predicts only a geopolitical shock or major international event could jolt the housing market at this stage.

"Without a shock like a Middle East war or rapid and deadly spread of the new SARs variant, chances are prices will keep rising firmly this year – helped by the media once again discussing the housing market most days. FOMO [fear of missing out] beckons."

 

property investment investment interest rates REINZ housing market landlords price growth average price property values house prices real estate
Comments (4)
J I
Ahhh Tony, your comment "...helped by the media once again discussing the housing market most days. FOMO [fear of missing out] beckons." is just SO true.
0 0
4 years ago
Paul Dyer
Not to mention the compounding effects over time of population growth.
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4 years ago
Peter Lewis
While the costs of new-builds inexorably rises (red-tape, OSH, bureaucratic obstacles) then the price of existing houses will always rise alongside them.
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4 years ago
Hamish Patel
I don't think we have seen the true pressure of the Healthy Homes bill in the regions. Many old bungalows will become legally unusable overnight in 2021. Anything under 200k may not be economical viable to improve.
0 0
4 years ago
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Latest Comments
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As much as I disapprove of the ASB stance, I totally understand it, ESPECIALLY as the ComCom expect us to put an application to 4-5 banks, and not just the one we believe to suit the client the best. By demanding this, we would be tying the banks up with 4-5 times the applications necessary to secure a settlement. Banks would know that only 20-25% of applications are going to make it through to settlement. This shotgun approach is why banks are overloaded.
1 month ago Andy Phillipson
New customers locked out of ASB’s pre-approvals
This is pure BS from the major banks. In front of ComCom earlier in the year they denied any policy of channel inequality yet there clearly is from some (at board level) both in turnaround times and cashbacks for example. They need to staff up, sort their antiquated IT and give Advisers the respect they deserve. New Zealand borrowers are voting with their feet and using Advisers more and more. Are some banks starting their pushback? One as done it before so no surprise there.
2 months ago Jeff Royle
New customers locked out of ASB’s pre-approvals
As a financial adviser, business owner and ex-banker/home lender in NZ & Australia with almost 20 years experience I can tell you that this is very concerning for several reasons - first one being that as bank staff you still get paid regardless of whether you put the approval thru, lazy/incompetent/time poor bankers are often declining loans rather than taking the time to push a difficult deal thru as they get paid either way, as a financial adviser who doesn't get paid unless the deal settles we are more committed to securing an approval which is why more volume now comes thru the broker channels. This feels like it's the banks way of reducing costs by not having to pay brokerage to advisers when bank lenders doing nothing should be sitting on the broker overflow lines. This directly affects small businesses and is another example of banks playing God & redirecting profit margins back to their own coffers - there is no valid excuse for branch lenders doing nothing to not be sitting on these overflow lines. It makes a mockery of giving the choice back to the clients who are already typically having poor banking experiences when dealing direct with bank staff.l and in no way supports small businesses already doing it tough.
2 months ago Natasha Viliamu
New customers locked out of ASB’s pre-approvals
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2 months ago Craig Pope
New customers locked out of ASB’s pre-approvals
Sorry I don’t believe ASB are overrun with applications as we are traditional in a slow market so I think this” high volume “ excuse is rubbish, ASB will still post a massive profit due margins being so high but they can’t hire extra staff?? This is a disgrace! for consumers that choose to go through an independent mortgage adviser ASB are turning them away, but an ASB branch can write that deal no problem? , what happened to offering choice to the consumer? And being competitive? Are Comcom silent on this? Are the dealer groups /master FAP’s who have a monopoly over mortgage advisers’ access to bank mortgage lending silent on this? Why do we pay dealer groups /Master FAPs thousands in fees and costs if they can’t or don’t want to even back the people that pay their wages. All mortgage advisers want is an even playing field no more no less. How would ASB feel if all mortgage advisers in NZ stopped sending business to them for a few months?
2 months ago Valkyrie Vulcan