PHOTO: Property Boom
Wow! What a run. Massive sales numbers and massive price growth with residential property in New Zealand has finally come to a stop – and now we are seeing the correction, we have been expecting long ago. In our last article in May, 2018 Will the New Zealand Real Estate Market Crash in 2018/19?, we explored the possibility of a Property Crash.
The factors that Forbes mentioned in 2014 are now very much in play…………..
Forbes, back in 2014 suggested that there where 12 clear reasons why the market would crash here in New Zealand:
1) Interest rates have been at all-time lows for almost a half-decade
2) Property prices have doubled since 2004
3) New Zealand has the world’s third most overvalued property market
4) New Zealand’s mortgage bubble grew by 165% since 2002
5) Nearly half of mortgages have floating interest rates
6) Mortgages account for 60% of banks’ loan portfolios
7) Finance, not agriculture, is New Zealand’s largest industry
8) New Zealand’s banks are exposed to Australia’s bubble
9) Australian and Chinese buyers are inflating the property bubble
10) New Zealand has a household debt problem
11) Government overseas debt has nearly tripled since 2008
12) The New Zealand dollar is overvalued
No one wants a CRASH right? Whilst property values are high and such growth has made property unaffordable for many in most regions – a Property Crash is not good for the economy.
We expect sales volumes and prices to decrease over all regions between now and 2019/20.
Reasons why the Property Boom is over:
- Barfoot & Thompson’s sales for June suggest the Auckland housing market remained largely flat for the first month of winter.
-
NZ house values fall as agents keep sellers’ expectations in check
- Core Logic latest report suggests sales volumes are lower and other weaknesses are at play
OPINION PIECE – The Property Noise Group
