Auckland property developers feel funding pinch

As Christmas approaches, BNZ’s Chief Economist Tony Alexander cautions that we’ll see a slowdown in the supply of Auckland houses due to lack of finance available to property developers. However, expect a brighter outlook come the New Year. 

Inflation around the world has been lower than expected by practically all of us since 2009 and that has seen interest rates stay at unusually low levels. These low rates have been one of the factors propelling house prices upward. Now things are changing.

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Auckland property investors: Deposit rise and limited lending possible

BNZ’s Chief Economist Tony Alexander reflects on Auckland’s housing market since the minimum 40% deposit for property investors was introduced and suggests further changes could be coming.

We are now three months into the period when banks have been implementing the Reserve Bank’s policy of requiring investment property purchasers to have a minimum 40% deposit. The evidence to date from this change is that buyers have backed away from the market, resulting in lower auction clearance rates and properties taking slightly longer to sell. Continue reading…

Auckland’s housing market: What you need to know when buying

BNZ’s Chief Economist Tony Alexander reflects on a few factors to be aware of if you’re looking at investing in the Auckland property market.

Back in the Weekly Overview of November 1, 2012, I produced a list entitled, 19 Reasons Why Auckland House Prices Will Keep Rising. Since then prices on average have risen 65% and while we see minimal chance of another 65% rise over the next four years, it still looks like prices will rise further. Continue reading…

Is the Unitary Plan the great saviour of Auckland’s housing crisis?

BNZ’s Chief Economist Tony Alexander reflects on how the Unitary Plan will affect soaring Auckland house prices and future urban growth.

For the third time in three years the Reserve Bank has imposed new rules on the minimum deposit size investors must have when using a mortgage to buy property in Auckland. The first occasion was October 2013 when the 20% minimum was introduced for all borrowers. Then in October 2015 we had the 30% minimum for Auckland investors. Now we have a 40% minimum starting from October this year, although this has already being applied by banks for lending not arranged before the policy was announced a month ago. Continue reading…

End in sight for rising house prices

BNZ’s Chief Economist Tony Alexander reflects on the New Zealand housing market and upcoming changes around the minimum deposit size, that takes place from September 1.

As a macroeconomist my job is to avoid getting mired in the details of what is happening in particular parts of the economy and instead to focus on the big picture and the broad trends. These are the things which I talk about when making presentations to groups of retailers, home buyers, home builders, manufacturers, investors, farmers and so on around the country. Continue reading…

The tricky truth behind our falling homeownership rate

BNZ’s Chief Economist Tony Alexander reflects on trends in Auckland’s housing market.

Much has been made of data released in recent years showing a downward trend in the rate of home ownership in New Zealand from an estimated 74% in 1991 to an estimated 65% in 2013. There are many problems with the calculation including a lack of knowledge of who owns about 20% of the country’s housing stock and houses moving into family trusts. Continue reading…

Today’s inflation forecast: Subdued, with a chance of increased credit control

What are the chances that interest rates will rise sharply, cause big cash flow problems for home owners, and produce a 10% plus decline in Auckland house prices? Very slim. Why? Because the key driver of rising interest rates is rising inflation and central bank efforts to fight it, and all around the world apart from Venezuela inflation is low and showing little sign of rising. Continue reading…

A Place in the Sun: New Zealand house prices versus overseas

There is a programme on TV which I like to watch called “Place In The Sun”. There are various versions of it but the central idea is that average English people have decided they want a second home for holiday purposes located in a sunny place such as Spain or Portugal. They get taken through five properties and choose which one they like the most and sometimes make an offer and end up with an agreement on camera. Continue reading…

As low as they’ll go: Interest rates and Auckland’s housing market

The Reserve Bank cut its official cash rate by 0.25% on December 10 so it is now back where it was in March last year before 1% worth of increases to fight expected inflation. The inflation never came. In fact rather than reaching a predicted 1.6% inflation fell away to just 0.4% courtesy of a firm NZ dollar, falling fuel prices, and factors unexpected by the Reserve Bank. Continue reading…

Why property investors should keep an eye on transport developments

I finished last month’s housing blog by noting that if Auckland’s pace of house price rises was not sustainably slowing down then the Reserve Bank would probably take the 30% deposit requirement for investment purchases to 50% or 75%. This probably won’t be necessary because the pace of price inflation has slowed to 3.8% in the three months to October from 6.1% in the three months to July and 8% in the three months to August. Continue reading…