One of our esteemed leaders went to hear Tony Alexander talk at Mossgreen-Webb Gallery last night. Here are a summary of his comments last night (thank you for sharing Champak).
It's an insightful read. Enjoy :-) Key Takeaway... The Auckland housing market has "slowed" and may even have "plateaued" for the short-medium term but there is nothing in the fundamentals that suggests there will be a short or medium term retraction in prices. The pricing of the Auckland housing market simply reflects a new equilibrium where demand meets supply. Where does the AKL market sit at the moment? - broad trend : flattening - turnover down 12% on average compared to last year - prices 95% higher compared to Sept 07 (last peak) - rest of country on average has prices 35% up over the same period - 27% of current sales in Auckland are to investors - 13% of sales in Auckland are to first home buyers - the remainder are existing homeowners moving around - 80% of new apartments planned for the suburbs Why are prices at their current levels? Not enough houses being built since middle 2000s - insufficient labour - consent process too slow - Auckland gets 60% of NZ's net migration flow - 3 persons per house on average Auckland is fast becoming a world class city - depth in many sectors - "Mini Lindon" - price of houses in Auckland now reflects 2 people working per household Auckland's population is growing rapidly - migration + retention - Auckland population CAGR last 3 yrs 2.8% - Auckland has 34% of NZ pop vs 21% in of NZ's population in 1961 The world has settled into a low inflation environment - low interest rates - the search cost of information is almost negligible - lower interest rate since the 1960s. Investors are looking for yield! Asians buying - they have seen a model for wealth creation through buying property ahead of the boom in their home countries Kiwis buying - catch up buying - getting to the FOMO stage RBNZ - job is to keep inflation low & ensure lending astute 40% LVR restriction seems to have hit the sweet spot So will prices drop? In a word: No. For prices to drop would require: - interest rates to rise strongly - not a high chance (we are structurally in a low interest environment) - recession - unlikely as economy underpinned by various sectors (tourism, agriculture, technology, immigration) - oversupply of houses - no chance of increase in construction rate as shortage of labour, materials & money What does the future look like? - money is in short supply in NZ due to low savings rate - we will enter a period of credit rationing (like the 70s) - cannot finance required borrowing organically - have to borrow it from overseas (still have 29% reliance on overseas debt) - this may lead to a dropping off of demand but to what extent remains unknown Thanks for reading. I look forward to helping you on your real estate journey - home or investment; just call me to take that first step!
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AuthorWelcome. Fiona is a successful business woman with a long connection to Papakura and from a family with a long history of working in real estate. Archives
February 2018
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