House prices rising like a rogue helium balloon

by Maya Breen19 Oct 2015
Auckland’s house prices are expected to keep going up as the number of properties sold stay put or drop, according to Property Institute of New Zealand newest housing market survey.

The Residential Market Confidence Survey revealed that although further value inflation in Auckland is expected with 100% of the city’s property market experts in agreement that all price categories will rise in the next six months, less than half surveyed believe sales volumes will do the same. 

Property Institute chief executive Ashley Church says these findings are consistent with the Institutes view that Government and Reserve Bank attempts to dull Auckland house price inflation have largely missed the mark.

"Stricter Loan-to-value ratios and tighter rules around property investment certainly appear to be having an impact on sales volumes at the lower end of the market as young couples and investors disappear - but they're having no discernable impact on prices".

"Meanwhile - more and more owners of midrange and high end properties are choosing to hold on to their homes in the hope of maximizing their capital gain - effectively, constricting an already tight market even further".

Church says there will be no respite from this problem unless the underlying supply issue is solved.

"Unless we start making meaningful progress on the construction of new homes in Auckland all we're really doing is tinkering and house prices will continue to rise, unabated".

"The Survey Panel is made up of some of the country's most knowledgeable Residential Valuers, Property Managers, Real Estate Agents and Property Finance Specialists - most of whom come from within our own membership - so it represents the informed views of those at the coal-face of the industry".

Experts in the Wellington and Christchurch markets predict an increase in the number of properties sold at the low to mid price range - but Christchurch panelists were much less confident (17%) of an increase in the number of sales at the high end of the market in that city and indicated in previous surveys that there would be no change in the prices of midrange and high end houses over the next 6 months.

"This would tend to support the view that Auckland investors are starting to buy in other parts of the country where the loan-to-value rules are less onerous - and that they are focusing their activity at the lower end of the market where cash flow returns are better".

The Residential Market Confidence Survey will be published every quarter portraying the combined views of property market experts across Auckland, Wellington and Christchurch. 

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