CoreLogic releases its latest Quarterly Property Economic Market Review
Domestic mortgage rates are expected to stay low and stable well into 2019, according to CoreLogic research analyst Kelvin Davidson.
CoreLogic New Zealand has released its latest Quarterly Property Economic Market Review, which has shown slightly weakening market conditions. The incoming macroeconomic data indicators revealed that as GDP growth slows and the net migration balance continues to ease downwards (albeit from a high level), demand for property generally follows.
Davidson suggests the official cash rate staying on hold at 1.75% and little evidence that higher offshore financing costs are affecting New Zealand will help hold-up property demand.
“Within the property market itself, we’re seeing activity levels (e.g. valuation volumes, completed sales) are generally low around the country and the outlook seems pretty flat too,” said Davidson. “Given that, as well as the fact that affordability remains a problem in many towns and cities, it’s no surprise that property value growth has eased in the past few months.”
The report showed that property value growth across New Zealand slowed to 5.7% in June from 7.6% in April. Values remain stagnant in Auckland and Christchurch, while Dunedin remains amongst the main centres showing any sort of strength. In Wellington, values dropped by 1.3% from March to June.
CoreLogic proprietary buyer classification data shows that movers generally remain cautious and have a relatively low market share at present. First home buyers, however, are still active and have slightly increased their share of purchases from 22% in Q1 to 23% in Q2.
The report also suggests home-buyers purchasing with cash have a historically high market share (13%), while mortgaged buyers are more restricted, due to the LVR rules and tightening bank credit policies. In terms of total numbers, activity across all buyer types has fallen.
“Given the shortages of supply that have built up, and barring a big unexpected global shock, this orderly/controlled NZ property market slowdown, driven at least partly by credit restrictions, is unlikely to become a downturn,” Davidson said. “Although building consents continue to rise strongly and KiwiBuild could add a bit of cream on the top for extra supply, property values look set to stay high in the medium term.”
