Majority of New Zealanders still expecting house price increases

Property price increases nationwide don't look like they're slowing down any time soon. Shockingly, QV data shows that for the last two years ending August nationwide average value growth has exceeded 11 per cent per annum. 

For the last two years ending August nationwide average value growth has exceeded 11 per cent per annum.

Most of this growth is centred around Auckland, Hamilton and Tauranga, all of which must be considered by serious investors. But what's going to happen in the future?

People's confidence in the market is an interesting indicator of the direction that the market may go. With that in mind, let's have a gander at how people are feeling about the market at the moment and explore possible reasons for their sentiments.

By understanding buyers confidence in an area we can start to predict when and where to buy an property. 

Auckland's showing signs of slowing

A Colliers survey explored people's outlook on the housing market during the third quarter of 2016. Interestingly it revealed that 77 per cent of Aucklanders believed that house prices would rise over the next year – a proportion lower than that of both Tauranga and Hamilton. Additionally, only 43 per cent of Aucklanders believe that prices would rise by more than 5 per cent during that period.

Most Aucklanders believe that house prices will increase over the next year. Most Aucklanders believe that house prices will increase over the next year.

While this survey reveals that the majority of Aucklanders still expect house prices to increase, it also suggests that other cities are catching up in terms of buyer confidence. The more moderate price outlook may be caused by the passing of the Unitary Plan and the belief that it may help to reduce prices in the super city. Perhaps it's time to look elsewhere for property investment?

Hamiltonians underestimate the markets trajectory

81 per cent of Hamiltonians surveyed believed that house prices will increase over the following 12 months.

Hamilton has rapidly caught up with Auckland in terms of housing confidence.

81 per cent of Hamiltonians surveyed believed that house prices will increase over the following 12 months and a further 40 per cent believe they will increase by more than 5 per cent.

QV data suggests that these results greatly underestimate potential growth as most areas of the city saw growth approaching 30 per cent during the year ending August 2016. 

Tauranga's taking the lead

 Residents appear to be aware of Tauranga property's investment potential. A national high – 84 per cent of respondents indicated that they believed prices in the area would increase over the next year (the highest percentage in the country).

Included in that percentage are the 44 per cent that believe prices will increase by more than 5 per cent. 

Investor lending is slowing down

Anticipation of new LVR restrictions and the tightening of bank rules has caused a sharp decrease in the amount lent to investors – a fact that makes the high buyer confidence even more surprising. 

This has contributed to a drop in investor lending of more than 300 million over July and August this year. The decrease in total lending over the same period is less than 200 million indicating that banks are in fact focusing their efforts on limiting the amount that investors borrow. 

Investor lending is making up a smaller proportion of total lending every month. Investor lending is making up a smaller proportion of total lending every month.

Considering the current environment understanding how to build wealth and accumulate a deposit is even more important for fledgling investors.

Seek a helping hand

The financial advisors at Goodlife understand the current state of the property market and how lending restrictions might impact your plans for the future. With confidence so high and all signs pointing towards capital gains (if you know where to buy) now could be the perfect time to secure your future. 

So let us use our expertise, experience and knowledge to help you take advantage of the current market.

Here's to your financial independence!

Daniel Carney
Authorised Financial Adviser / Investment Property Expert

Contact us now!

0508 GOODLIFE
info@goodlifeadvice.co.nz