House prices predicted to slowly rise – Comments by Howard Morley

Posted by Auckland Property Management Ltd on December 18, 2019 | Company News, News, Property Management

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Howard Morley, Managing Director, discusses the latest industry insights showing house prices are predicted to rise over the coming years.

As most of our clients are involved in the housing market, particularly in Auckland, the end of the year is a great time to reflect on what has happened to the value of houses. It is a very positive sign that 2019 has seen a real lift in house prices as the year has progressed. REINZ showed house prices around New Zealand rose 1.5% in November (year on year), and in Auckland prices lifted 2.9% in value in November compared to last year. More importantly median house prices across New Zealand were up 8.6% over the last 12 months and according to Statistics NZ, the rental prices across New Zealand compared with November 2018 has increased by 3.2%.

In my opinion, these gains and after tax returns far outstrip putting savings into a bank account at say 3.5% before tax.

Better still, the New Zealand Treasury recently released their Half Year Economic and Fiscal Update and they anticipate that the New Zealand house prices will continue to slowly rise in the next 5 years as follows:

  • June 2020 –              4.9%
  • June 2021 –               6.1%
  • June 2022 –              6.2%
  • June 2023 –              5.6%
  • June 2024 –              4.9%

Factors such as:

  • Lower interest rates;
  • Double income households;
  • Continued higher net migration needed to fill jobs in Auckland;
  • and, housing shortages, particularly in Auckland where we are not building enough new homes;

will in my experience, help all of the New Zealand Treasury’s predictions become a reality.

Over the difficult period over the 2017 and 2018 years when new Government regulations put increasing demands and extra cost on to Landlords, and house prices were falling, we at Auckland Property Management have been encouraging Landlords to hold on to or increase their investment in residential property. We are still of the opinion because of the points noted above that rents in Auckland should continue to rise.

At Auckland Property Management we are still short of good homes to rent and manage and would welcome any referrals to provide the homes Auckland needs going into 2020.

 

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