Harcourts NZ CEO Chris Kennedy is going against the grain that the property market may be cooling and says house prices will keep rising because demand is still outweighing supply.
Residential housing figures show a 13.2% increase in sales across New Zealand in January from 2015 with the average house price nationally up 8% to $488, 078, according to Harcourts February market watch report.
But Kennedy is concerned with the 24.5% drop in the total number of properties available to buy nationally.
In the Central Region, which has shown the largest increase in price of 24%, and an average house selling for $400,041, there are now 40.5% less properties available for purchase than in January last year.
Kennedy says this shortage of stock is a result of the halo affect from Auckland as buyers seek more affordable pastures outside the city.
“Hamilton and Rotorua are just two of the centres that have experienced an upsurge in Aucklanders trying to buy,” says Kennedy.
“Until more houses are built in Auckland to meet demand, this flow-on effect into the regions will continue.”
The average house price in Auckland and Northland is now $801,662, up 17% from the same period in 2015 and stock on hand is down 10.8%.
Wellington is also low in stock with a 38.7% drop from January 2015 (1536 properties) to January 2016 (941 properties).
Kennedy says these figures clearly show that New Zealand’s property market is not experiencing any kind of tapering off or decline.
“When the number of buyers exceeds the number of sellers, prices will continue to rise. It’s that simple.”
January data from the Real Estate Institute of New Zealand (REINZ) showed Auckland house sales were down 6.2% in the most recent month and 27% below the August peak.
chief economist Nick Tuffley
stated in the bank’s quarterly economic forecast released yesterday that housing trends over the next few years remain a key uncertainty.
“In Auckland, initial signs suggest the newly-imposed RBNZ’s investor loan-to-value ratio restrictions and tax rules are having an impact on activity and house prices,” said Tuffley.
“Activity immediately slowed and price growth appears to have moderated significantly.
“However, there are some early signs that perhaps the initial slowdown was a knee jerk reaction, with sales starting to lift again and a lack of new houses listed for sales keeping market conditions very tight.”