Short term interest rates are drifting down and there’s even the possibility that the Reserve Bank will lower the OCR.
Business confidence is low thanks to Labour’s policies which don’t support business growth. The policies are deterring businesses from investing and hiring new staff, and the Reserve Bank, which is independent from the government, is concerned. The RB has indicated it will lower interest rates if it doesn’t see an improvement soon.
Immigration has slowed a little, but nothing significant. Labour’s promise to reduce immigration looks unlikely to be kept. They’ve stopped some students coming in, but allowed construction companies to hire more workers from offshore, effectively cancelling each other out. What could be slowing immigration a little is less Kiwis returning home when the news isn’t as positive as it was.
Don’t get me wrong, I’m still positive on NZ Inc. Unemployment is low, exporters are profiting from the lower currency, Fonterra’s payout will be good this year, the country is still doing well overall. But when you’re a young Kiwi on the other side of the world, in a good job, you won’t pack up and head home to NZ unless the news is very positive.
For Sale listings are still low, demand is at the long-term average, people still want to buy homes and investment properties. The biggest hurdle we are seeing at the moment is our buyers obtaining finance. Bank lending criteria is tough, it’s taking longer and some buyers aren’t meeting the criteria, but enough buyers are getting finance to keep sales at a reasonable rate for this time of year.
Rental property vacancies are at all-time lows and rents are rising quickly helping to improve yields.
I still think we’ll see houses prices rise 5-8% in Hamilton over the 2018 year and can’t see any reason why prices won’t rise at least another 5% and probably more in 2019.
Investing in new, well-located, high quality rental housing still makes good sense.