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…

The buyers are back: Auckland’s housing market

Last month I wrote about the way in which data for Auckland were suggesting that the pause in Auckland’s housing market following the October introduction of an IRD number requirement had ended. The March data confirm this. After rising on average by 5.5% in February Auckland sales prices rose another 4.3% in March. Sales were down 12% from March 2015 and this goes to show that what caused the pause was not sellers placing properties on the market but buyers holding off. Now they are back. Continue reading…

Data crunch: An update on Auckland’s housing market

There are many statistics which get thrown around regarding the Auckland housing market. Personally speaking, as a macroeconomist, I ignore the data broken down by suburb though for many people that is the most important information. Instead I look at numbers for the city as a whole. My preference is the REINZ dataset which is more up to date than the Core Logic/QVNZ information. Continue reading…

Migration flows and Auckland’s housing shortage

I might have done this exercise here previously, but if I haven’t here is something you should find interesting, and if I have then this is an update. On average in Auckland there are three people per household. So in the absence of any specific information suggesting that Kiwis returning to NZ and migrants, along with Kiwis deciding not to leave NZ who might otherwise have done so, being different from this average, lets use it for calculating the extra number of houses needed to handle population change from migration flows. Continue reading…