Growing house construction is a substantial boom for the economy through extra business for materials manufacturers and distributors, architects, inspectors and so on.
It’s around this time of the year that I take an educated guess at what will happen with house prices and mortgage rates. As I’ve said time and time again, the strongest correlation that exists is between house prices and interest rates.
I started writing this property-focussed column for Squirrel Mortgages back in June this year. If you’ve been reading it from then you'll still be surprised like I am that housing markets around the country are so strong, but not as surprised as those who haven't had the chance to read it.
One of the strongest expectations most of us have had regarding the impact of fighting Covid-19 from early this year, has been that construction of houses will fall away. This expectation was soundly based but the chances of that are getting slimmer by the day.
This Wednesday, Treasury released their latest set of economic and fiscal forecasts, as legislation requires they do just ahead of a general election.
Some people retain a negative view on the housing market on the basis of an expectation that the economy is stuck in recession. Actually, the recession ended two months ago and there is little chance of it returning then morphing into a depression.
Back in March, as we headed into lockdown, most forecasts for our economy and housing market were decidedly on the pessimistic side. Things certainly have weakened off, but not by as badly as feared, and in some cases the post-lockdown spending surge has produced sales well above levels of a year earlier.
One of the advantages which existing home owners have over first home buyers is experience. They have learnt that as a rule there is no “best” time to buy property and it is wise to simply get on with it as soon as one is comfortable with the debt to be taken on, and then manage changes along the way.
I think now is a good time to be at least looking, but take your time and make sure the numbers stack up. If you buy cash flow neutral in the right areas, irrespective of what happens with short-term house prices it will be an excellent long-term investment.
We now have data in hand showing that after an obvious collapse in real estate activity from late-March through to early-May, sales have since rebounded.
I recently talked about the factors providing support for the New Zealand housing market which included interest rates, a shortage of listings, and a long queue of frustrated buyers. One other factor that's just now getting more attention is the high number of Kiwis returning home.
After a short hiatus and a 5%-10% fall in house prices, I’m going out on a limb given the current market pessimism and predicting we will stretch into what might be the last great housing boom. Here's why.