Industry experts have spoken out against Finance Minister Bill English’s comments on Wednesday that a potential crash may result from an over-supply of housing, eight years on from the initial shock in demand.
“Prices have gone up due to imbalance in the demand and supply,” Global Financial Services Limited
director Ajay Kumar
, a veteran mortgage adviser with nearly 40 years experience behind him, told NZ Adviser
“Demand is more than supply,” he says and although the government is trying to increase the supply, it will take time to have an effect and he doesn’t see house prices coming down soon.
“I’ve been in the industry for more than 39 years and my personal experience is that in Auckland market, (as long as) the demand-supply imbalance is not corrected, property prices are unlikely to significantly come down.
“The only thing we are finding, with the thirty per cent deposit which is needed for investors in the housing market in the Auckland region, many investors are not in a good position to provide a thirty per cent deposit,” Kumar says.
“Therefore those investors are having less demand now so property prices may not increase twenty per cent next year as happened last year in Auckland, but property prices are unlikely to come down at least in my opinion until 2016.”
Others have also spoken out in light of English’s comments, with professor of construction management at AUT John Tookey telling Fairfax, "The use of the word crash certainly is a polemic moment ... Is a correction coming? Yes absolutely. Is it going to be a catastrophic collapse? I would not consider that to be as likely as a deflationary hiss."
"He is the finance minister so people are obviously going to listen to him, but the most recent news I can give you is we had 14 auctions scheduled for today and 10 have sold,” chief auctioneer and national residential manager for real estate agents Bayleys Daniel Coulson, added. “So it doesn't seem to be that people are deterred in the market.”