Building costs have shot up by a whopping 40% over the last 3-4 years, and when you throw in sky-high interest rates and hurdles from the Resource Management Act, developers and home buyers alike are dealing with a real headache.
With most people now back at work and the kids back at school, passage of time away from the election and pre-Xmas hassles will likely start encouraging more people to give thought to buying or selling a house. But can we see evidence yet that a new wave of buyers is coming through?
From June 1, the Reserve Bank will be easing up on lending rules. But will that, coupled with dropping house prices, be enough to turn buyers' fears of over-paying into a fear of missing out?
Investors largely remain concerned about interest rate levels and access to bank finance. So when will they return to the housing market, and what will be the catalyst?
I recall mentioning last year there was a good chance that the housing market would bottom out around the end of 2022 then stage a small recovery over 2023 with prices maybe rising by 5%. But then the inflation numbers came in.
Every now and then it is a good idea to sit back and remind ourselves of the big picture and how we got to where we are at the moment. For the NZ housing market, the story is this.
We all underestimated the extent to which prices would rise when the pandemic struck in early-2020. Now, almost everyone has underestimated the extent to which prices, and sales, are heading down now that the pandemic is over and the inflation resulting from excess stimulus needs to be brought under control.
Stories of builder collapses alongside high financing costs have made people step back from signing up for a new property. Presales for developers have shrunk and many projects are now being put on hold.
Do we have any evidence in hand of the impact on the residential real estate market yet of the recent round of fixed mortgage rate increases undertaken by banks? Yes, we do.
We can unequivocally say that house prices are going down, but the pace of decline in house prices is slowing. When will house prices bottom out?
The Reserve Bank met expectations this week with another 0.5% increase in the official cash rate so it now sits at 3.5% compared with the record low just over a year ago of 0.25%.
While there may be a shift underway in the minds of first home buyers, will the turning of the cycle be as swift going back as it was going back down?