by Jenny Ruth
Ironically, one of his reasons for thinking this is the doomsayers who started predicting a downturn about this time last year.
While a modest downturn in activity has developed recently but prices have continued to appreciate. Potential investors were warned off investing in housing in the face of such predictions.
"The positive think is that it did not stop the market in its tracks, but it put the anchor in," Trass says.
But now there’s a large amount of pent up demand from potential investors waiting for house prices to drop as predicted.
At the first sign that prices are softening, those investors are likely to jump into the market, putting a natural floor under prices, he says. That isn’t the only reason Trass can’t see a crash coming.
"Our overall economy’s quite robust in both the urban and rural sectors" and there’s still upwards pressure on wages with the labour market being so tight. The latter also means job security is at high levels.
With rentals having flattened recently, that means rents are becoming more affordable, he says.
Another reason for optimism is that while net immigration has levelled off, it hasn’t fallen in a hole.
"Property sales volumes are still very strong. Yes, they’re down, but we’re comparing them with the peak of the boom," Trass says.
Another crucial difference between now and 1997 when house prices last peaked is that it’s still possible to buy rental properties which are either already cash-flow positive or which can be made so with renovations.
"You don’t have to negatively gear in this market." In 1997, practically any rental property prospect was significantly cash-flow negative, he says.
But he thinks some parts of the housing market are vulnerable, particularly inner city apartments in Auckland.
"We’ve had a huge amount of building. Some people are already trying to get out of those before they’re finished and a lot of the already built ones are untenanted."
And some of the smaller centres where prices have sky-rocketed, such as Nelson, could also be vulnerable.
Trass points to the Rowling family’s former beach-front bach at Kaiteriteri near Nelson which has just sold for $2.07 million, setting a record for the district. It was bought by former Nelson Evening Mail owner David Lucas and his wife Jane.
Trass says that since potential offshore buyers "must have deeper pockets than little old Kiwis," that suggests those offshore buyers are no longer in the market.
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