PropertyIQ for property professionals

Housing Market Update

Tuesday 23 September, 2008

Here is something which reinforces one's view that the outlook for the housing cycle is rough but not as bad as some are predicting. "I am Irish and regularly keep up to date with the Irish newspaper via the internet, Just last week I read that immigration consultants in Ireland and England are currently bombarded with enquires about moving to NZ and Aussie due to the current economic climate in Europe. Apparently, half of the enquires come from parents with young children. So another possible influx of new arrivals with money to throw at housing (and finance companies) in the next few years perhaps."

Net migration into New Zealand

Migration numbers are very different this cycle from last time around. During 1998 there was a net migration loss of over 6,000 people which rose to 9,000 over 1999, then 11,000 over 2000. This time around the net migration flow was a gain of just over 5,000 people in the year to July with an upward trend in place. While there are plenty of Kiwis being dragged across to Australia there are also plenty of people coming to us from other countries where things are looking worse by the day. And the worse the outlook gets for the United Kingdom economy one suspects that more people will think about coming down here especially with the Kiwi dollar weakening against the British pound. Not only that but the drag factor for Kiwis to leave New Zealand diminishes as news about overseas economies gets worse.

Key Forecasts

  • Dwelling consent numbers to fall from 24,500 in the year to March 2008 to below 18,000 in the year to March 2009 with a slight recovery to March 2010 then above average activity after that as attention turns to a shortage of dwellings late in 2009.
  • Real estate sales falling from 77,130 in the year to April 2008 to between 55,000 and 65,000 come the end of this year then recovering back over 65,000 in calendar 2009 with further growth over 2010.
  • House prices down 5%-10% by the end of 2008, flat over 2009, rising slightly over 2010, possibly earlier.

Source: Tony Alexander, Chief Economist of the Bank of New Zealand.