Guest post from Tony Alexander
There are five strong forces acting to pull back the level of intensity of buyer demand for residential property at the moment. But just because the boom has ended does not mean a crash is on its way. In my “Tony’s View” weekly publication of December 2, I run through 17 reasons why the housing market has flattened out and 19 reasons why there is not a crash.
These developments plus a few more have seen a substantial stepping back of first home buyers form the market with a drop in FOMO (fear of missing out) to the lowest levels since April last year.
Over 2022 and 2023 some more restraining factors will come along including a surge in house supply and net migration outflows of Kiwis – especially to Australia. Many investors are also likely to seek to bring some balance to their retirement portfolios by selling some investment property and shifting into other assets such as shares.
For first home buyers, once banks learn to live with the new lending rules and ease back from the recent tightening up, conditions will be better. Price growth will be far slower than in recent years and stock availability far greater. For investors the slowing market is also good news because it means pressure will come off the government to do something else to try and make housing more affordable for young buyers.
The chances of the majority Labour government doubling down on their March 23 tax changes and making other expenses non-deductible as has happened for interest costs are now very slim.
To sign-up to either my free weekly Tony’s View publication, or weekly Tview Premium plus extras, go to www.tonyalexander.nz.
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