Massey University Professor Bob Hargraves has warned in this piece in the Dominion Post that housing supply is limited and could stop house prices falling, meaning that the window of affordability for first home buyers could open for just a short time. Here's his view.
Massey University housing expert Bob Hargreaves said the increase in take-home pay through tax cuts and lower mortgage rates would amount to little compared to the increasing pressure on a static number of houses. An upturn in sales activity recently was putting pressure on the existing stock of houses for sale, with tighter control on finances from banks and the return of residential property investors making life difficult for those looking to get into the market for the first time. Building activity has been severely constricted by the economic downturn and improving migration statistics would start putting pressure on the available housing stock, Professor Hargreaves said. New dwellings had halved from nearly 30,000 about seven years ago, to about 15,000 a year now. A few years of "overbuilding" would help, but essentially there were too few houses being constructed for the amount of interest.
What I think Housing supply is a tricky one. The data is not reliable. A lot of people focus on new dwellings built. But census data on unoccupied dwellings is more accurate and useful over the longer term. It shows the share of unoccupied dwellings in Auckland, for example, has actually risen to 7% from 5.3% a decade ago. Your view?