Will the New Zealand Housing Market Crash in 2020?

PHOTO: NZ Property Market

OPINION: One thing is for certain – the NZ Economy is tanking. What will that mean for the New Zealand housing market?

Like most New Zealanders we have a vested interest in ensuring the property market does not crash, however unlike many ‘Property Expert Commentators’ we simply tell it as it is… and it does not look good New Zealand. Plus – we are not experts, just trying to form our own opinion, based on history and current events.

Here is our 10 POINTS to consider – when forming your own opinion:

Property markets go up and down in volume of sales and price due to Demand V Supply. The reality is there will be less demand
There will be less mortgage applications. This is the web page to keep an eye on in coming months – https://www.rbnz.govt.nz/statistics/c31 . Less mortgage applications – mean less buyers in the market.
Banks are already telling property buyers – if you are not an existing customer do not apply for a mortgage. Let us know if you have experienced such bank sentiment.
Unemployment – this is going to go through the roof. Less jobs – less lending – less mortgages – less property sales. Simple.
Airbnb. There is already evidence of property investors converting these over to standard rental properties – for rent. The reality there is no way many of them will command the weekly amount they were getting from Airbnb bookings. Once they figure this out – these properties will flood the market.
Whilst mortgage interest rates are cheap and some expect this to soften the blow for mortgage holders – if you don’t have a job, it does not matter how cheap mortgage interest rates are. There will be a large number of people having to sell their homes/ baches/ rental properties. Yes there are Mortgage Holidays – so that is a major positive for some.
Banks will suggest then force many property investors – to offload some if not all of their property portfolio. This happened in 2008 with the GFC in New Zealand and in 1987 in the sharmarket crash. Banks will always look to minimise their risks
Commercial property markets are in turmoil. (this is an article for another day)
Rental returns on residential property will come back significantly. This will mean the returns to not stack up on current pricing levels – thus a drop in house prices purchases when landlords are buying
Last BUT not least. Bank lending. Do really think the Banks are going to continue lending at the massive levels like they have been? It had to stop. First home buyers borrowing $800k plus to get into a home was a joke then – even more of a joke now. Those days have gone…