House prices will rise more quickly this year than they did during 2012, BNZ chief economist Tony Alexander says.
He said the rise would be driven by demand exceeding supply at current prices.
“The housing affordability debate will grow and the crisis for low-income earners in Auckland particularly will worsen. Investor interest will spread out of Auckland while some home owners will cash up and shift to more affordable areas with cash freed up for retirement spending.”
He said construction costs would rise and he did not expect any moves to be made to shake up the building materials sector, availability of land or rules and fees for developing it.
“Chinese buying in Auckland then other centres will become more evident. Rising overall net migration inflows will spark debate.”
Alexander said Barfoot and Thompson’s reported ratio of sales to listings over the past three months stood at 26.3% compared with 15.9% a year ago, the strongest result since 2003.
“But an extremely important thing to note however is this. Back in 2003 the market in Auckland was to a substantial degree being driven by a strong net migration inflow which for the country as a whole amounted to 35,000. This time around however the net flow was a loss of 1567 in the year to November.”
He said that looked to be turning around, with migration slowly becoming positive.
“Meaning – as we have noted here previously, if this is what the Auckland market looks like with a net nationwide population loss, imagine what will happen when the net flows turn positive as we expect they will this year.”