About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Monday, December 10th, 10:20PM
rss
Latest Headlines

Bleak investor predictions premature

Worried about what the future holds for property investors? Market fears are premature, high profile speakers at a property investment conference over the weekend agreed.

Monday, May 28th 2018, 6:00PM

by Miriam Bell

BNZ chief economist Tony Alexander

Not only has the country’s property market slowed, with price growth flat-lining in the main centres and reduced sales volumes, but a raft of new housing and tax policies are causing landlords to rethink their investments.

This situation has been causing great concern for many investors, with some starting to sell up their rental properties in order to get out of the industry.

But some high-profile speakers at the Gilligan Rowe & Associates Property Leaders event were not as pessimistic when it came to the future for investors.

BNZ chief economist Tony Alexander told the conference that the market has paused, after hitting a new high equilibrium, but it is not an end-of days scenario for investors.

The boom phase of the property cycle has ended, with the Auckland property market flat for about 18 months now, he says.

“This is largely due to the Reserve Bank’s third round of LVRs, which resulted in a reduction in credit availability, along with some price resistance.

“The flat-ish market will continue for a while but it is a pausing of the market. I don’t buy in to the scary crash predictions.”

That’s because the same supply and demand fundamentals remain in place, particularly in Auckland: the supply shortage is not going to be resolved any time soon and demand is unlikely to wane.

Alexander says there will be a bit of an interest rate rise that will impact on some and migration might ease off a bit.

“Some investors might leave the market, or look to downsize due to the new rules from the Government, which continues to confuse investors with speculators.

“But the big cities are going to continue to grow and the queue for property is just going to get bigger and bigger.”

For this reason, young buyers might want to take advantage of the current pause in the market, as well as any sell-off of rental properties, Alexander says.

“Also, I wouldn’t rule out the Reserve Bank easing the LVRs slightly, to a 30% deposit requirement for investors, sometime over the coming year.”

Property Institute chief executive Ashley Church presented an even more optimistic take on the market.

He says the key to the future of the market is in the past and taking a look back over the last 45 years shows there has only been one significant house price correction of any significance.

That was back in the mid-1970s, when prices dropped by 38%, but since then the market has followed a pattern where it goes up before tapering off slightly and then heading up again.

Church says the market might be flat now but the drivers for price growth and rental demand are still there and still strong.

“The cooling of the market has been due to interventions, not because there is a lack of demand out there. So is the party over for investors? No, I don’t think so.

“Looking at history, there is a pretty strong suggestion that the same scenario that has been seen in previous boom cycles will be the same one that drives the market for some times yet.”

Church took this theme even further, on the release of the latest joint report by the Property Institute and property data company Valocity today.

He says that, for those who follow New Zealand property cycles, the report’s information allows them to predict where the market will go over the next 10 to 12 years with some degree of accuracy.

“We know from experience that property values roughly double in Auckland every 10 to 12 years.

“Based on this ‘rule of thumb’ I’m of the view that the next cycle will start in 2021/2022 and that, by 2026 or 2027 the median house price, in Auckland, could be around twice what it is now.”

Meanwhile, some of the opportunities for investors identified by speakers at the GRA Property Leaders Event included those served up by Auckland’s Unitary Plan and those that can be found in the more affordable Christchurch market.

Read more:

Property Institute questions government housing policy 

« Free Investment Property Showcase Events: Auckland, Wellington and ChristchurchTownhouse consents surge »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
ASB Bank Special - 3.95 4.29 4.49
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.10 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.79 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 3.95 4.49
Sovereign 5.90 4.45 4.69 4.89
Sovereign Special - 3.95 4.29 4.49
The Co-operative Bank - Owner Occ 5.75 4.10 4.35 4.49
The Co-operative Bank - Standard 5.75 4.60 4.85 4.99
TSB Bank 5.80 4.45 4.69 4.99
TSB Special - 3.95 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.15 4.29 4.59
Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com