According to Tony Alexander’s latest “Tony’s View” report, the endgame for the housing market decline may be underway.  This is due to a number of positive factors in the market, including a strong labour market and an improving economy.

Foreign students are returning to New Zealand, immigration is increasing, and the world growth rates are picking up.  In addition, job security in New Zealand is strong and tourism is returning.  This, combined with the fact that people are not rushing to sell their properties, means that the real estate market is starting to look more positive.

The building industry is already under a lot of pressure, with construction costs rising rapidly, and the recent flood damage in Auckland will only add to the demand for new construction.  The ANZ Bank’s January Property Focus Report also supports these positive changes, stating that the end of rate hikes should quickly be followed by an end to house price declines.

The Reserve Bank is now expected to raise rates by only 0.5% rather than the previously expected 0.75%, and the chances of more mortgage rate cuts have risen.  This will take away the prevailing negative influence on the market and encourage potential buyers to enter the market.  With falling house prices, housing affordability is also improving.

While the real estate market may not see a full recovery in the near future, the recent positive indicators suggest that the market is moving in the right direction.  For potential buyers, now is a good time to enter the market as the chances of the market bottoming out by mid-year have risen.

John Kenel
Assured Property

Sources: Tony Alexander’s “Tony’s View” and ANZ Property Focus