The 2019 property market is experiencing some déjà vu with the first three months delivering an “almost identical” performance to 2018, characterised by sluggish sales activity and controlled value growth nationwide, except in Auckland.
CoreLogic senior property economist Kelvin Davidson says these conditions will likely remain the same throughout the rest of 2019, with a solid macroeconomic environment, strong borrower environment and relatively quiet overall market supporting this prediction.
Davidson says there are also a number of other influencing factors to watch for; most notably, any policy intervention from the Government and Reserve Bank which may affect the direction of the housing market.
“The prospect of a broad-based capital gains tax in 2021 has been ruled out, but the effects of last October’s Foreign Buyer Ban seem to be playing out in softer sales activity,” Davidson stated in CoreLogic’s Quarterly Property Market and Economic Update Report.
“The tax ring-fence for rental property losses is currently going through the parliamentary process,” he continued. “Then out on the horizon we have the potential requirement for banks to hold more capital on their balance sheets, and hence have less money to lend out. We also need to keep an eye on KiwiBuild and how that might impact supply.”
With regards to Auckland, Davidson says the city “looks set for further weakness,” – not unsurprising, given affordability remains low and securing buyers is still difficult. Auckland values have dropped by 1.5% over the last year, and Davidson says that further modest falls look likely.
“Overall, although the New Zealand property market is on a relatively solid footing, sales volumes are likely to remain subdued in 2019,” Davidson concluded. “National average prices may edge up by about 3% from their current level of $686,523.”