The month started interestingly enough, with the NZ Herald’s Brian Gaynor* summarising some important points made by the International Monetary Fund on their Global Housing Watch website (which covers the world’s housing markets), revealing that:
- New Zealand ranked eighth of 64 countries in terms of house price appreciation over the past 12 months.
- In terms of price-to-income, New Zealand residential property is the most expensive in the world.
- New Zealand has the third most expensive residential property market in terms of the house price-to-rent ratios.
The article also reported on a 45-page report on New Zealand released by the IMF, with a section headed “House prices, household debt, and financial stability risks in New Zealand.” The report projected our residential property to be overvalued by about 20 to 40 per cent based on price-to-income and price-to-rent ratios. It believes a meaningful fall in house prices would have an impact on the economy through wealth, investment, bank balance sheet and confidence effects. In the light of the latest cut to the cash rate announced by the Reserve bank almost a month ago, we can see why it is in their interests to protect the economy through keeping the housing market healthy and high.
While there has been much talk about the market growth, interest rate falls and supply vs. demand, one of the critical watershed dates for the traditional summer selling season has been Easter. This year it was comparatively early so the dynamic appeared to be slightly different and we’ve had a frenetic time leading up to the Easter weekend, talking to home owners wanting to bring their properties to the market before the weather turns.
This has resulted in a good selection of properties launching recently and in the next two weeks, covering the spectrum from first homes though to more established family offerings.
Over Easter we only ran open homes on Saturday, and had large number viewing, consisting of both local buyers and those visiting Auckland. Some of the out-of-towners were coming to terms with what their dollar could buy in the Auckland market. It must be a little scary for those who have not witnessed first-hand the growth that has been instrumental in the prices being achieved now. Most buyers from out of town are investors however, so the performance and yield factors must be taken into consideration. It could well be a case of ‘spending it to make it’.
If you are still looking to sell, there is still time to take advantage of current market conditions. If you are a buyer starting to worry you have missed your opportunity: take heart, and keep watching this space over the next few weeks. It could be your last chance before hibernation!
*{Summary of the IMF report paraphrased from article by Brian Gaynor: http://www.nzherald.
