We find the current dynamics of New Zealand’s housing market quite interesting. Two main factors are at play here: the increase in house prices (now rising in most places, including Auckland where they are 1.9% above their lows while the rest of the country is up 0.5%) and a significant surge in net migration. Despite many Kiwis moving abroad, there has been a considerable influx of immigrants, predominantly from China and India. This has resulted in an overall net increase of 87,000 people to our population over the past year.
This population boom is having two major impacts on our economy. On one hand, it’s easing the labour market as businesses are finding it less challenging to hire unskilled labour. On the other hand, it’s increasing pressure on the rental market due to higher demand for accommodation.
From my perspective as a landlord, this heightened demand makes it considerably easier to secure good tenants now compared to earlier in the year. The shift is anticipated to cause an upward trend in rents which will likely drive house prices higher.
Moreover, additional factors such as rising insurance costs and rates are expected to contribute towards increasing rents and thereby pushing up house prices further. Interestingly though, changes in interest rates do not seem to significantly correlate with fluctuations in rent over time.
Looking ahead politically could also impact our housing market predictions; specifically if we see a National-led government after October 14 elections that reintroduces investors’ ability to deduct interest expenses from their rental incomes for tax purposes – this move could potentially result in added price pressure particularly at lower-to-middle end properties across the country.
Source from Oneroof: Tony Alexander
The opinions and research contained in this article are provided for information purposes only, are intended to be general in nature, and do not take into account your financial situation or goals.
