PHOTO: When gazing into the property crystal ball, you must conjure up the three Ps: Population, Preference, and Policy
- The largest migration boom ever recorded is receding, slowly. But we will remain attractive to migrants, and our population won’t peak.
- We have a shortage of over 100,000 homes. Supply has not kept pace with demand. Demand is still growing, capacity constraints are being hit, and we need more affordable dwellings.
- Policy changes, like capital gains tax, will hinder confidence. But the fundamentals outweigh tweaks to taxes. We expect property prices to consolidate, before regaining traction into the mid-2020s – aided by income and population growth.
The Kiwi housing market has recovered from the lows in sales recorded last year. National house prices are up 4% yoy. Although gains are largely being made in the regions, as they play catch-up. Auckland’s market remains muted. Investors are uncertain, and therefore cautious. The Government is gearing up to implement policies targeted at speculators. These policies include tightening the bright-line capital gains test, removing the negative gearing tax loophole and banning foreign purchases of existing stock. The policies, and the uncertainty associated with them, may hold back house prices over the next few years. But we don’t expect a major correction in housing. Because the fundamentals are solid, and there are no signs of any sinkholes.
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