An interesting report out from CoreLogic has shown that prices have come back a touch in Auckland. It is always a good idea for investors in Australia to take an intense interest in what's happening in the New Zealand property market.
How is the mood in the New Zealand market right now?
Peter Bromley, general manager of sales and marketing for CoreLogic New Zealand said: “Auckland values have continued to be more plateauing, and that's been the case for two years, but there's still some growth in other centres, particularly around Wellington and Dunedin, where listings on the market have remained pretty much at low levels. So, lots of interest in those, and obviously when you look at the price point to Auckland, there's obviously much more affordability in terms of buying in those areas.
“The average value (like the median in Australia) at the end of August was just over $1 million in Auckland. Whereas in places like Wellington, it's 770-odd thousand dollars. In places like Dunedin, it's 415. So, if you look at that affordability when incomes are probably not even as high as 90,000 in some of those places, it makes it a much more realistic prospect to buy in those areas rather than Auckland.”
How does Kiwi Saver work?
KiwiSaver seems to be getting some good press and good reports also out of New Zealand with first home buyers. And it's obviously having some good impact too. There may be some lessons there for other parts of the world to learn from.
Peter said: “That's one of the things is holding up. I think some of the first home buyer market and it's important that I think we see how that continues to trend. My time here, it's one of the things I'm working with to understand more, those drivers for KiwiSaver. But from what I see and what our research guys tell me, it's one of those things that helps encourage first home buyers.”
What are the impacts on investors?
Recent legislation introduced by the government in New Zealand has tried to put a bit of a dampener on overseas investors. But what impact is this having on the market and investors themselves?
Peter explained: “From an investor market it's interesting. If you take it at a very high level, it's still fairly buoyant, and in fact if you look at the investment market, the alternative, those that have taken mortgages this quarter versus previous quarters. So, 24.4% of mortgages in this last quarter was from investors as opposed to in the previous quarter and quarter two this year, 23 and 22 in quarter one. So, there's still a fairly strong activity in the investment market.
“Obviously they're designed to do some change around the Tenancy Act and obviously in terms of regarding rent rises and eviction periods and also the negative gearing changes, but overall you're not seeing a mass exodus at all in that investor market. I think from the overseas buyers, though, you'll see some potential impacts, maybe in Auckland, where they've obviously focused more, and obviously, in places like Queenstown Lakes District, you'll see some as well. So, I think that's still to be seen in those particular areas of where overseas investors might change their thinking.”
Are some markets suffering more than others?
Peter said: “Even the Auckland market. Some of the things I've started to understand here since I've been here is we built last year, I think, 11,000 new properties, but one of the things that you've got to look at is net new growth in new property. So, you might build 11,000 new properties, but you have to knock down 5,000 to get those 11,000. And I think one of the things is actually how we build better stock and then in the right places. And I think one of the other things is how that then is supported by the right infrastructure that goes with it. So just simply building a whole bunch of new homes in a new area doesn't really work well for the whole social environment if you don't have the right infrastructure around schools, transport, and how long it takes to get to work is a real critical part, I think. And I know New Zealanders are now really looking at that.
Peter Bromley: “I was fortunate to be at a launch last night for the Property Foundation, which is some work done by a lot of industry working with Massey University and they're taking some of the lessons that have been overseas, and seeing how you make sure that you build your new stock in the right way and support with the right infrastructure, be it transport, be it schools.”
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