Westpac chief economist Dominick Stephens believes a resurgent housing market is a sure thing, although he concedes it may be quieter in some provincial markets.
Writing in Westpac's latest Home Truths newsletter, Stephens said he agreed with last week's decision by the Reserve Bank to keep its loan-to-valuation ratio (LVR) mortgage lending restrictions in place because of the risk of a resurgence in the housing market.
"That's an assessment we more than agree with," he said.
"Home Truths has been arguing for some time that a resurgence in the housing market is not just a risk, it is close to a sure bet.
"And the latest data is starting to vindicate that view."
Seasonally adjusted new mortgage approvals jumped 8% in October, new listings on Realestate.co.nz were up 12% and seasonally adjusted house sales were up 4.7%, he said.
"New Zealand is currently going through an unprecedented boom in net migration.
"Construction activity has ramped up sharply, but not by enough to keep up with population growth."
That and the fall in fixed term mortgage interest rates which had occurred over recent months were sure to provide "...another significant tail wind for the housing market," he said.
"We would expect the housing market to continue along its current, perkier path so long as interest rates stay low.
"Eventually that will culminate in a modest lift in the pace of house price inflation."
However Stephens warned that not all regions would be so buoyant, especially those affected by factors such as lower dairy prices.
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5 Comments
And here's Cameron Bagrie & the economics team at ANZ;
"Last week’s release of property valuations for the Auckland area showed an average 34% gain since the 2011 valuation. It also put the value of the Auckland housing stock at slightly more than twice annual nominal GDP, and all up served as a reminder of why the speed limits were brought in the first place. We happily throw out the brickbats when we disagree with others, so one goes to ourselves over musing last week about the possible pending relaxation of LVRs."
And in the other corner:
Harcourts chief says Reserve Bank still hitting wrong target
14 November 2014 i
Harcourts chief executive Hayden Duncan said yesterday the Reserve Bank’s loan:value ratio “speed limit” restrictions hadn’t greatly affected the property markets they were supposed to – Auckland & Christchurch – but had affected first-homebuyers outside those 2 cities, where sales & prices continued to dip or remain stagnant.
“In Auckland & Christchurch there has been a clear recovery from the winter lull that is traditional in real estate, with written sales up and average prices continuing to increase. The provinces, by contrast, are continuing to struggle, with the South Island in particular failing to thrive.
“The Auckland & Christchurch markets are driven by low supply & high demand. LVR restrictions have not had an effect on prices, which continue to rise, because demand is growing and construction is not keeping up with it.
“Instead, our provincial markets, which were never overheated, have been badly affected and average Kiwis trying to break into the property market have been prevented from doing so.”
http://www.propbd.co.nz/harcourts-chief-says-reserve-bank-still-hitting-wrong-target/
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