Whats happening?
REINZ and Trademe data shows a little life in certain areas in terms of house prices. The increase in the supply of houses has not been at the same pace in every region. Rents are starting to show some sign of a dramatic increase in supply and it could be revealing the movement of NZer’s. Auckland actually showed a 3.8% increase in the Median prices, month on month(March vs Feb). Still down compared to the previous year.
Anecdotal evidence seems to point to some more interest in buying houses based on open homes and more active auction rooms. However overall global uncertainty could be holding some back. Not mention the roller coaster of ride in the share market which would impact 1st home buyers deposits. With interest rates so low, we normally would have seen more enquiries.
Manukau and Waitakere show approx a 3% increase in the median house prices month on month, Auckland city seeing an increase of 6.8% in the median. Rents have had the heat taken out of the increases, due to supply becoming more comfortable. Year on year stats from Barfoot and Thompson shows South Auckland with the highest level of rent increases.
Whats ahead?
It is hard for me to remember a time when interest rates have been dropping along with house prices. It does seem at some point with the interest rates where they are you would imagine a lot more positive momentum at this stage. When we look at building consents however there is some clue. It seems we have been through a large scale building boom which seems to have started in 2019. Around the time the Unitary Plan increased the possible sections dramatically. We went from building consents of 3,000 per month in previous booms to more than 4,000 at the peak 2021 – 2022. This has dropped down to below 3,000 again.
Data from Stats.govt.nz shows a dramatic down turn in new building consents for the year ending Feb 25 compared to 24.
- 13,773 in Auckland (down 9.7 percent)
- 2,851 in Waikato (down 15 percent)
- 1,811 in Wellington (down 21 percent)
- 4,799 in rest of North Island (down 9.7 percent)
- 6,652 in Canterbury (down 0.6 percent)
- 3,708 in rest of South Island (up 10 percent).
Not starting new building projects in a subdued housing market seems like quite a natural response. And it does seem previous building down turns lays the seeds for the next price increases due to pressure in supply. Ofcourse for our beautiful net migration is a major factor and even in a rescission we seem to have more people coming in than leaving. We do lose a lot of skilled people to Australia and this has certainly feels obvious in this downturn.
And so we always have to consider who we are losing and who we are gaining. The regional movements and the types of housing are very different in terms of previous cycles.
