Property Institute Survey predicts more house price rises

Property Institute Survey predicts more house price rises

Property Institute of New Zealand Chief Executive, Ashley Church, has released the results of a new Housing Market Survey which shows that Auckland house prices are expected to continue increasing and that the number of properties sold will remain unchanged - or even drop - as demand for new housing stock continues to significantly outstrip supply.

Among the Key Findings of the Survey is a view that, despite media speculation to the contrary, further value inflation in Auckland is widely expected with 100% of Auckland property market experts predicting further increases across all price categories over the next 6 months. But far less than half of those surveyed expect an increase in sales volumes in any price category.

Mr Church says that this finding is consistent with the Institutes view that Government and Reserve Bank attempts to dull Auckland house price inflation have largely missed the mark.

"Stricter Loan-to-value ratios and tighter rules around property investment certainly appear to be having an impact on sales volumes at the lower end of the market as young couples and investors disappear - but they're having no discernable impact on prices".

"Meanwhile - more and more owners of midrange and high end properties are choosing to hold on to their homes in the hope of maximizing their capital gain - effectively, constricting an already tight market even further".

Mr Church says that this problem will continue to get progressively worse until the underlying supply issue is dealt with.

"Unless we start making meaningful progress on the construction of new homes in Auckland all we're really doing is tinkering and house prices will continue to rise, unabated".

The Residential Market Confidence Survey is an initiative of the Property Institute and will be published every quarter. The Survey represents the combined views of property market experts in Auckland, Wellington and Christchurch and is described by Mr Church as 'probably the most accurate barometer of expert market opinion currently available'.

"The Survey Panel is made up of some of the country's most knowledgeable Residential Valuers, Property Managers, Real Estate Agents and Property Finance Specialists - most of whom come from within our own membership - so it represents the informed views of those at the coal-face of the industry".

Separate Survey Panels have been established in Auckland, Wellington and Christchurch and each Panel Member was asked to provide:

* An opinion of general market confidence

* An opinion on whether the average property within a relevant price bracket could reasonably expect an improvement, no change, or a decline in value over the course of the coming six months

* An opinion on whether the volume of transactions completed within a relevant price bracket was likely to improve, experience no change, or decline over the course of the coming six months

In other Survey findings Mr Church notes that the Wellington and Christchurch Panels had strong confidence in house price increases at the lower end of the market (homes below $350,000 in those cities) but that the majority of the Christchurch Panel were predicting no change in the prices of midrange and high end houses over the next 6 months.

Experts in both markets have predicted an increase in the volume of properties sold at the low end and midrange - but Christchurch Panelists were much less confident (17%) of an increase in the number of sales at the high end of the market in that city.

"This would tend to support the view that Auckland investors are starting to buy in other parts of the country where the loan-to-value rules are less onerous - and that they are focusing their activity at the lower end of the market where cash flow returns are better".

The next Residential Market Confidence Survey will be conducted in December.

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